MORRISVILLE - Charles & Colvard, which makes moissanite gemstones, announced late Tuesday that it cut about 10 jobs, or 18 percent of its work force, as part of a broader effort to slash costs amid slowing sales.

The Morrisville-based company also reported that first-quarter net sales declined 41 percent to $3.4 million, as jewelry retailers reduced inventory of the man-made gemstones.

The net loss during this first three months of the year was $698,000, or 4 cents a share. A year ago, the company reported first-quarter net income of $339,000, or 2 cents a share.

Charles & Colvard makes moissanite gems, which are similar in appearance to diamonds and used in rings and other items. The company is trying to boost acceptance among consumers, but faces a slowing economy that is weakening sales of jewelry.

"While we were disappointed with our first-quarter financial results as sales trends at retail continue to be soft, we remain intently focused on addressing short-term challenges our company is facing," said CEO Bob Thomas.

The job cuts are one step recommended by a consulting firm Charles & Colvard hired last year to review its business and financial health. The cuts will save the company about $500,000 a year.

Thomas said the cuts were made across all departments including sales, management and administrative staff. "It was very difficult. All of them were good people," Thomas said. "By virtue of a slowing economy and the difficulties in the jewelry sector, [the decision] was prudent." The company now employs 45 workers, he said.

Thomas said further changes "will address more encompassing issues" and will be announced after the company's shareholder meeting on May 27.

"It is certainly understandable that frustration can grow when progress is not evident," Thomas said. "Our task is to not allow that frustration to prevent us from taking positive actions that will fulfill our expectations for moissanite and for Charles & Colvard."

One analyst says that the company's future could likely include a sale.

Eric Wold, managing director of Merriman Curhan Ford in San Francisco, said that though Charles & Colvard sales have suffered in recent quarters it has a lot of value to offer a potential buyer.

Wold wrote that the company's inventory of moissanite gemstones is worth about $42 million, which he estimates could retail for as much as $169 million. Based on current valuation of Charles & Colvard's assets, Wold estimates that it would fetch $3 to $5 per share, a premium of 146 percent to 310 percent.

"We believe Charles & colvard could be a possible acquisition target by a company that realized the long-term potential of moissanite," Wold wrote.

Charles & Colvard shares, which are down 76 percent in the past year, were trading down 4 cents this afternoon at $1.22.

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