) third quarter loss of 22 cents per share came in narrower than
the Zacks Consensus Estimate of 31 cents loss per share.
Formfactor's revenue of $41.3 million was down 24.6%
sequentially and 20.7% from the year-ago quarter.
Revenue by End User
The DRAM, Flash and system on chip (SoC) customers generated
63.0%, 20.0% and 17.0%, respectively, of third quarter
The DRAM business decreased 32.0% sequentially to $26.0
million. The weakness in DRAM probe card demand was on account of
softness in the core PC market. Since this pushed the
demand/supply equation out of balance, there was also an impact
on pricing, which therefore also contributed to the decline in
product revenue in the last quarter. resulted from an oversupply
of DRAM devices, which in turn resulted in a price decline and
reduction in demand for PCs.
The Flash business was down 13.0% sequentially to $8.4
million. NAND revenue was flat with the previous quarter at $5.3
million. The decline in Flash revenue was due to weak lead-time
execution and decreased complexity seen by customers.
The SoC business was $6.9 million, down 3.0% sequentially.
Formfactor's customers had a bad quarter, which was reflected in
the company's results in the last quarter.
The GAAP gross margin decreased 322 bps year over year to
19.8%. Lower volumes and unfavorable product mix were the main
reasons for the gross margin contraction.
Total operating expenses of $22.8 million were up 3.7% from
the year-ago quarter's $21.9 million. The operating margin was
(35.5%), down 1,630 bps from (19.2%) recorded in the
previous-year quarter. Both research and development, and
selling, general and administrative expenses increased as a
percentage of sales, although the lower gross margin was an
The GAAP net loss was $14.5 million, or 35.1% of sales,
compared with loss of $9.7 million, or 18.6% in the year-ago
quarter. Reported loss per share was 29 cents in the last
quarter, compared with 20 cents in the year-ago quarter.
After adjusting for restructuring charges and impairment of
long-lived assets on a tax-adjusted basis and including stock
based compensation, the proforma net loss per share came to 21
cents in the last quarter, compared with 19 cents in the year-ago
Inventories of $20.1 million were down 2.2% in the third
quarter of 2012. The company ended with cash and marketable
securities of $276.2 million, down $1.5 million during the
quarter. Formfactor has no debt. Long-term liabilities totaled
$5.6 million at quarter-end.
For the fourth quarter, Formfactor expects revenue of
$46.0−$51.0 million. The non-GAAP gross margin is expected to be
in the range of 11%-17% due to lower factory utilization and
fixed spending. Non-GAAP operating expenses are expected to be
$23.0-$24.0 million. The cash burn in the quarter is expected to
be $12.0-$14.0 million, excluding stock repurchase.
Formfactor an original equipment manufacturer (OEM) of
automated wafer probe cards that are used in the back-end portion
of the semiconductor integrated circuits (ICs) manufacturing
process. It is a well-positioned player in the semiconductor
industry and has further solidified its position with the
addition of MicroProbe's SoC probe card segment. The acquisition
will make Formfactor a bigger player in SoC probe card
However, the lingering macroeconomic weakness and softness in
the PC market that impacted Formfactor's results in the last
quarter are expected to continue in the next. Therefore,
Formfactor's core business (probe cards for DRAM and Flash) is
likely to remain under pressure in the near term.
Formfactor shares therefore carry a Zacks Rank of #3, similar
to front-end equipment suppliers
Lam Research Corp
), which has a Zacks Rank of #3 and
), which has a Zacks Rank of #4.
APPLD MATLS INC (AMAT): Free Stock Analysis
FORMFACTOR INC (FORM): Free Stock Analysis
LAM RESEARCH (LRCX): Free Stock Analysis
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