) recently completed its acquisition of MicroProbe, Inc., a
subsidiary of Astria Semiconductor Holdings, Inc. The company
spent $100 million in cash and $16.8 million in stock for the
acquisition. The deal was announced last month.
Headquartered in California, MicroProbe is the market share
leader in the system on chip (SoC) probe card market, with a
share of approximately 20% and has been continuously increasing
its market share. Last year, the company posted non-GAAP EBITDA
margin of approximately 20% and annual revenues of roughly $87.3
million, which was up 46% from the year-ago quarter.
FormFactor is already a leading supplier of memory probe
cards. Its existing SoC sales are driven by the microcontroller
(MCU) market, which is mostly used in auto and industrial
sectors. The acquisition will strengthen FormFactor's position in
the SoC probe card market, mainly used to test chips for tablets
and smartphones, where the company has been making significant
investments over the past 12-18 months.
Today, the advanced SoC probe card market is the fastest
growing portion of the entire probe card market. According to the
market research firm, VLSI Research Inc, probe card revenue is
expected to grow steadily and stay above the billion dollar mark
despite severe pricing pressure over the next five years. The
firm projects that the semiconductor probe card market will be
worth about $1.5 billion by 2016.
Management stated that though it does not expect substantial
cost synergies from the deal, the acquisition will be immediately
accretive to the company financials, beginning from the first
quarter of 2013.
FormFactor is an original equipment manufacturer (OEM) of
wafer probe cards used by semiconductor makers to test integrated
circuits. In the last-reported second quarter of 2012, the
company delivered revenues of $54.8 billion, up 57.5%
sequentially and 17.7% year over year. GAAP net loss was $4.2
million compared with a loss of $7.7 million in the year-ago
FormFactor has customer and market concentration that
increases execution risks. Increasing competition from
Cascade Microtech Inc
) is also a matter of concern.
Currently, the shares of FormFactor carry a Zacks #4 Rank
(short-term Sell rating).
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FORMFACTOR INC (FORM): Free Stock Analysis
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