Delphi To Terminate Methode Contract Next Week

Methode Electronics Inc. (MEI) said Delphi Corp. (DPHIQ) has told the company it will terminate its supply deal with Methode in one week.

The move is the latest battle between the companies - Methode in April filed a patent-infringement suit against Delphi contending it owns the technology for a sensing device built by Methode, a Delphi supplier and maker of electromechanical devices.

Delphi has contended in court documents that it was pushed into accepting a 40% price increase from Methode last year, according to Automotive News. It wants control of tooling drawings, which would enable it to move the work to another supplier.

Delphi has been under bankruptcy protection for several years and has been struggling to find the necessary financing to leave court.

Meanwhile, Methode reported a fiscal first-quarter loss of $19,000, compared with a prior-year profit of $6.8 million, or 16 cents a share. The results included restructuring charges of 10 cents and 9 cents, respectively. The company has been moving to lessen its exposure to the beaten-down North American auto industry, including stopping to provide products to Ford Motor Co. (F) in the region and Chrysler Group LLC.

Revenue slumped one-third to $89.8 million.

Gross margin dipped to 21% from 21.6%.

Methode shares closed Wednesday at $8.31 and were inactive premarket. The stock is up 23% this year.

-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354; [e-mail]