) reported fourth quarter 2013 loss of 25 cents per share,
narrower than the Zacks Consensus Estimate of a loss of 26 cents
Revenues of $48.5 million were down 28.0% sequentially but up
1.9% from the year-ago quarter. However, reported revenues beat
the Zacks Consensus Estimate of $48.0 million.
Revenues by End User
System on Chip (SoC) revenues in the fourth quarter amounted to
$29.9 million, an increase of $1.8 million or 6.0% from the prior
quarter. Overall strength in this market is currently being
driven by the shift from PC to mobile application processors
where probe card solutions are more complex and require higher
parallelism. The recent introduction of new models of smartphones
and tablets as well as the planned releases of new mobile
products and gaming platforms for the holiday season is also
Reported revenues for DRAM products were $15.1 million, a
decrease of 48.0% or $13.7 million from the third quarter. The
decrease resulted primarily from lost orders from a key DRAM
customer due to certain execution challenges as well as market
Flash revenues were $3.5 million for the fourth quarter, a
decrease of $3.6 million or 17% from the third quarter. NOR Flash
revenues increased by $0.6 million in the fourth quarter to $2.5
million, while NAND Flash revenues decreased by $4.2 million to
$1 million in the quarter. The decline in NAND Flash revenues
resulted from less high parallelism design opportunities and
Gross profit in the fourth quarter was $4.3 million compared to a
loss of $3.1 million in the year-ago quarter.
Operating expenses adjusted for restructuring, acquisition,
amortization and asset impairment charges came to $23.2 million,
up 5.9% from the year-ago quarter.
Pro forma net loss was $13.9 million (25 cents a share) compared
with a loss of $16.9 million (32 cents a share) in the year-ago
The company exited the quarter with cash (comprising of cash,
short-term investments, and restricted cash) of $151.5 million,
$5.2 million lower than the prior quarter. Cash flow in the
fourth quarter was benefited by higher-than-forecasted customer
receipts. FormFactor has no debt.
Cash usage for the fourth quarter was ($5.2) million compared to
$1.8 million of cash generated in the prior quarter.
For the first quarter, FormFactor expects revenues in the range
of $53.0−$57.0 million while the Zacks Consensus Estimate is
pegged at $54.0 million. Non-GAAP gross margin is expected to be
in the range of 23%-27%. Non-GAAP operating expenses are expected
to be $18.0-$20.0 million. First-quarter cash usage is expected
to be between $6 million to $10 million, including the $1.2
million for restructuring activities.
FormFactor is an original equipment manufacturer (OEM) of
automated wafer probe cards used in the semiconductor integrated
circuits (ICs) manufacturing process.
However, with probe card demand exhibiting a downward trend, the
problem of under-utilization of factories is likely to persist,
which will further prevent the company from absorbing all of its
manufacturing costs. Strict cost control measures will be adopted
by management to bring the situation under control. Additionally,
management's recent decision to focus on the mobile segment is
likely to be beneficial.
We believe that Form has the product pipeline and cost structure
to register robust growth and profitability going forward.
FormFactor shares carry a Zacks Rank #3 (Hold). However, some
better-ranked technology stocks worth considering include
Integrated Device Tech
) with a Zacks Rank # 1 (Strong Buy), and
Freescale Semiconductor Ltd
), both with a Zacks Rank #2 (Buy).
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