IRVINE, CA -- MFlex on Thursday night reported results fiscal second quarter net sales slipped 16% to $173.7 million on lower sales to key customers.

The net loss was $23.9 million, compared to net income of $12.1 million a year ago.

The flexible printed circuit maker last week had preannounced revenues would miss earlier guidance.

Non-GAAP gross margin during quarter ended March 31 was -2.7%, excluding the impact of an inventory write-down, versus 12.5% in the prior year. Including the inventory write-down, the GAAP gross margin was -8.9%. The year-over-year decline was primarily driven by lower overhead absorption due to reduced production levels. In anticipation of softer demand during the quarter, the company lowered production levels in order to reduce inventory. Inventory declined by $50 million during the quarter. The company recorded a $10.9 million inventory write-down as a result of unusable components, as well as a small portion that was written-down as a result of uncertainty in near-term demand forecasts.

MFlex guided for fiscal third-quarter sales of $155 million and $185 million and gross margin to be approximately breakeven.

Chief executive Reza Meshgin said, "Due to continued soft market conditions, we plan to continue to focus on reducing inventory levels during the third quarter. Therefore, we plan to again minimize production which we expect to continue to pressure our gross margin during the quarter. We believe these conditions are temporary and continue to expect a rebound in revenue and profitability in the fourth quarter and further into fiscal 2014, when we anticipate an increase in demand from both long-standing and newer customers. During the second quarter, newer customers comprised approximately 8% of sales and we expect this contribution to double in the third quarter. We are optimistic that this new customer momentum will continue, and that a broader customer and product base will alleviate the current challenges associated with seasonality and product cycles as we enter into fiscal 2014."