FormFactor Closes MicroProbe Buyout - Analyst Blog
19 October 2012 - 4:44AM
Zacks
FormFactor Inc. (FORM) 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 quarter.
FormFactor has customer and market concentration that increases
execution risks. Increasing competition from Advantest
Corp. (ATE) and Cascade Microtech Inc.
(CSCD) is also a matter of concern.
Currently, the shares of FormFactor carry a Zacks #4 Rank
(short-term Sell rating).
(ATE): ETF Research Reports
CASCADE MICRO (CSCD): Free Stock Analysis Report
FORMFACTOR INC (FORM): Free Stock Analysis Report
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