The stocks of two makers of wireless phone products continued to get hammered Wednesday, a day after they posted second-quarter results and outlooks that left a bad taste in investors’ mouths.
Shares of Anaheim’s Multi-Fineline Electronix Inc., a maker of flexible printed circuit boards for cell phones, plunged on concerns about the company taking a slew of charges for its cost-cutting program during the current quarter.
The stock closed down nearly 35% on a recent market value of about $435 million.
Investors seemed to shrug off Multi-Fineline’s positive June quarter results and take issue with shrinking profit margins and higher-than-expected costs.
Profits declined 15% from the March quarter to the June quarter because of higher-than-expected costs in ramping up production at M-Flex’s plants in China.
M-Flex is continuing its cost-cutting plan where it’s been slowly closing U.S.-plants and sending the bulk of its manufacturing work to China.
At the same time, the company has been expanding and updating its operations there and leasing other sites to keep up with demand.
The company said it plans to shutter a plant in Tucson and move some of the operations to its local headquarters in Anaheim.
The move, which is set to save the company about $2 million to $3 million a year, will have an initial price tag of about $2 million, a charge that will show up in the current quarter.
The company said it’s set to add another manufacturing site to its campus in Suzhou, China. Expansion of the new plants is expected to cost a total of $22 million.
Roughly $5 million was recorded in the June quarter and the balance is set to be accounted for during the current quarter.
For the current quarter, the company said it also expects to take charges of $6 million to $8 million for tax expenses related to the plant consolidation.
Shares of Smith Micro Software Inc., a maker of software for cell phones, also continued to slump after the company reported a second-quarter loss and gave a cautious outlook for the current quarter.
Shares closed down more than 16% on a recent market value of about $195 million.
The company reported sales of $24 million, up 53% from the same period a year earlier.
Including charges for write-downs on assets, stock compensation, taxes and other costs, Smith Micro swung to a loss of $158,000.
Without the charges, the company saw a profit of $4 million, down 30% from the year ago quarter.
Smith Micro restated its sales outlook for the year. It’s looking for $95 million to $105 million in revenues.
Analysts are looking for profits of about $19 million on sales of $101 million.
Investors zeroed in on Smith Micro’s outlook, which hasn’t been revised since the company reported first quarter results in May.
Wall Street was likely anticipating that Smith Micro would have boosted its outlook instead of holding steady, which may be viewed as a sign of stalled growth.
