Richey Shares Decline 26% After Disappointing News

GARDEN GROVE — Richey Electronics Inc. shares fell 26% in heavy trading Thursday after the electronic components distributor said it may not make its second-quarter earnings target because of lower orders.

Shares in the maker of electronic parts used in computers, medical devices and other products fell $2.625 to $7.50. A total of 895,500 share changed hands, more than 27 times the three-month daily average of 32,900. Earlier, the stock touched $5.75, its lowest level in more than a year.

April orders and its gross margin--revenue minus the cost of goods sold--fell below first-quarter levels, leading the company to caution that it might miss its second-quarter earnings target, said Richard Berger, Richey Electronics’ chief financial officer.

The April decline follows overall gains in the electronics and semiconductor industries during the past three quarters, Berger said. Since Richey Electronics supplies companies in these businesses, some investors may be worried the slowdown reflects broader industry sluggishness, Berger said.

Berger said the company and its customers remain “optimistic” about long-term growth potential.

Richey also announced Thursday that net income for the first quarter rose 54% to $1.7 million, or 19 cents a share, from $1.1 million, or 13 cents, a year ago. Sales dipped 2.7% to $56.8 million from $58.4 million. The company had been expected to earn 19 cents a share in the first quarter and 21 cents in the second, according to average estimates of analysts surveyed by IBES International Inc.

Separately, Richey said it agreed to buy 81% of Simmonds Technology Inc., a Canadian electronic components distributor, from Simmonds Capital Ltd. Terms of the transaction were not disclosed. Simmonds had sales of $30 million last year.