Why Multi-Fineline Electronix Shares Jumped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of electronics-maker Multi-Fineline Electronix were short-circuiting today, falling as much as 23% after it sharply scaled back guidance for the first quarter.
So what: The circuit-board maker, sometimes called M-Flex, said it expects revenues of $290 million for the quarter, above previous projections of $260 million to $280 million, but profits are taking a hit. Gross margin is expected to be only 8.5%, down from 12.2% in the previous year. CEO Reza Meshgin said the company scaled back production toward the end of the quarter and was forced to expense idle labor and manufacturing capacity. He also blamed a change in product mix for the drop in profitability and said the company may incur loss in the second quarter because of the current trend and a seasonal decline in revenue.
Now what: In its most recent quarter, M-Flex had taken in as much as 86% of its revenue from Apple , so this news is equally revealing about the iPhone maker's own struggles, on the heels of yesterday's report of a cut in orders. Without Apple, M-Flex could be in trouble. Today's news looks like a pretty clear signal to run.
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The article Why Multi-Fineline Electronix Shares Jumped originally appeared on Fool.com.Jeremy Bowman owns shares of Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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