) second quarter 2013 loss of 7 cents per share was narrower than
the Zacks Consensus Estimate of 9 cents loss per share.
Revenues of $62.7 million were up 19.2% sequentially and 14.4%
from the year-ago quarter.
Revenues by End User
System on chip (SoC), DRAM and Flash customers generated 44%,
43% and 13% of second-quarter revenues, respectively.
business generated revenues of $27.5 million, up 4.2%
sequentially. FormFactor is reaping the benefits of its
MicroProbe acquisition, by virtue of which it became the largest
supplier of probe cards to the fast growing SoC probe card
market. Overall strength in this market is currently being driven
by the move from PC applications toward mobile application
processors where probe card solutions are more complex and
require higher parallelism.
business rose 21.4% sequentially to $26.7 million. The strength
in DRAM probe cards resulted from stronger mobile demand and
higher pricing of DRAM devices from fourth quarter 2012 onwards.
FormFactor is witnessing a rise in demand for DRAM consumption in
smartphones compared to PCs.
We believe that the DRAM market may recover as the industry is
undergoing a structural shift from PC centered computing to
mobile and cloud centered computing.
business was up 102.4% sequentially to $8.5 million. NOR revenues
were $3.6 million while NAND accounted for the balance. Revenues
increased at more or less the same rate in both product
GAAP gross margin increased 890 basis points (bps)
sequentially but dropped 334 bps year over year to 26.2%. Higher
revenues and a favorable product mix contributed to the
sequential expansion in gross margins.
Total operating expenses of $24.9 million were down 15.8%
sequentially but up 9.9% from the year-ago quarter. The operating
margin was (13.6%), up 2541 bps sequentially but down 172 bps
from the year-ago quarter. Research and development (R&D)
expenses as a percentage of sales declined both sequentially and
year over year. While selling, general and administrative
(SG&A) expense declined sequentially, it increased from last
Pro forma net loss was $3.4 million or 5.4% of sales, compared
to a loss of $9.9 million or 18.8% in the previous quarter and a
loss of $4.0 million or 7.3% in the year-ago quarter.
Including restructuring charges and impairment of long-lived
assets on a tax-adjusted basis, GAAP net loss per share came to
16 cents in the last quarter compared to 37 cents in the prior
quarter and 8 cents in the year-ago quarter.
Inventories of $26.1 million were up 5.8% in the second
quarter of 2013. The company exited the quarter with cash and
marketable securities of $154.5 million versus $153.6 million in
the prior quarter. FormFactor has no debt. Long-term liabilities
totaled $10.3 million at quarter end.
Cash generated from operations was $1.0 million in the second
quarter compared with ($11.1) million in the prior quarter.
For the third quarter, FormFactor expects revenues in the
range of $65.0−$69.0 million. Non-GAAP gross margin is expected
to be in the range of 32%-35%. Non-GAAP operating expenses are
expected to be $21.0-$22.0 million. Cash generation in the
quarter is expected to be $2.0 million.
FormFactor is an original equipment manufacturer (OEM) of
automated wafer probe cards used in the semiconductor integrated
circuits (ICs) manufacturing process. It is well-positioned 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
the SoC probe card market.
However, the lingering macroeconomic weakness and softness in
the PC market that affected FormFactor's results in the 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 carry a Zacks Rank #3 (Hold). Other
technology stocks worth considering include
Arm Holdings Plc. Ads
Advanced Micro Devices
Analog Devices Inc.
) each with a Zacks Rank #2 (Buy).
ANALOG DEVICES (ADI): Free Stock Analysis
ADV MICRO DEV (AMD): Free Stock Analysis
ARM HOLDNGS ADR (ARMH): Free Stock Analysis
FORMFACTOR INC (FORM): Free Stock Analysis
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