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Read-Rite Sinks on Weak Outlook

The stock loses 39% of its value after warning on revenue and earnings.



warned investors that its third-quarter loss will be wider than previously forecast while revenue probably won't grow as much as expected.

The maker of magnetic recording heads and other computer equipment predicted in April that revenue would increase by 30% in the fiscal third quarter from its second-quarter sales of $40.9 million "with a significant reduction in the net loss." Last quarter, Read-Rite lost $35.9 million, or $1.48 per share.

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The company blamed its limited cash reserves for its inability to "maintain a smooth flow of materials and components to its Thailand operations." Read-Rite said it continues to look for additional sources of financing to fund the production ramp of its 80-gigabyte products.

The company reported cash reserves of $4.2 million as of March 30. Shares of Read-Rite were losing 49 cents, or 39%, to 76 cents.