Circuits Assembly Online Magazine - HEI Reports 22% Decrease in 2007 Sales

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MINNEAPOLIS – EMS provider HEI Inc. announced 2007 net sales fell 22% year-over-year to $38.38 million.

Net sales for microelectronic operations were $22.7 million, a decrease of 27% compared to 2006. Sales for AMO operations were $15.7 million, a decrease of 12%.

Microelectronics was hit by lower demand for legacy business resulting from a series of consolidations in the telecommunications industry, offshore outsourcing by a medical products customer, and a reduction in flexible substrate sales to the company’s primary external customer, who reduced orders to consume excess inventories, reports HEI.

Gross profit as a percentage of net sales was 4%, compared to 16% in 2006. The reduction was a result of lower sales volumes, which did not contribute as much to cover fixed operating costs. In addition, the decline in gross margin in the current fiscal year compared to the prior was a result of a lower volume of higher margin design, development, verification, and validation contracts at the AMO segment, says the company.