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Merix drops on 3Q warning

Despite topping estimates for its second quarter, shares of Merix Corp. (Nasdaq: MERX) fell over 50 percent after warning for its third quarter.

Shares in the circuit board maker were hit hard Tuesday, plunging 13.13 to 12.

For its second quarter, the company came in with net income of $10.2 million, or 70 cents a share, on revenues of $58.4 million, topping analysts' estimates of 67 cents a share. Earnings improved both sequentially and year over year, as did revenue, which bumped up 63 percent from the year ago period and 14 percent sequentially.

But the strong quarter was overshadowed by the lowered guidance for the upcoming quarter.

According to the company, postponement or cancellation of orders previously placed, and a slowdown in demand from customers will "significantly reduce premium revenue" in the last half of fiscal 2001. The softening in demand will reach across all of the company's market segments.

Merix now expects sales in the third quarter to be between $49 million and $51 million, with earnings per share in the 44 cent to 48 cent range, well below First Call's 69 cent a share estimate. The company sees some improvement in the fourth quarter, with sales and earnings improving sequentially: 15 percent and 25 percent, respectively.

"We believe the overall fundamentals of our business remain solid and we expect current demand conditions to be a short-term issue," added the company's CEO, Mark Hollinger.

Separately, Merix said it has signed an agreement with Teradyne, Inc. (NYSE: TER) for the supply of high end printed circuit boards.