The company now expects third quarter revenue of $301 million compared with previous projections of between $310 million and $330 million. The company added that it now expects a gross profit margin for the third quarter of between 16 percent and 18 percent and a loss per share for the third quarter of between $0.18 and $0.16 per diluted share.
"Late in the third quarter, production and shipments of one new version of our MEMS microphone was placed on temporary hold due to a low level defect that was discovered during the ramp up of the microphone product," said Jeffrey Niew, CEO of Knowles, in a statement. "This negatively impacted Q3 revenue by more than $20 million as we produced and shipped fewer units than previously expected. The root cause has been identified, implementation of corrective actions are in place, and we are working to return to production and resume shipments for this product."
Niew added that Knowles' management believe this is an isolated incident and that Knowles would remain the market leader in MEMS microphones.
Knowles did not discuss what, if any, impact the production pause would have on its fourth quarter sales.
Knowles was the clear leader in MEMS microphone sales in 2013, according to market research by IHS Technology. Knowles sold nearly $500 million of MEMS microphones in 2013 to gain 59 percent market share and be more than four times larger in sales than its nearest rival.
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