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FormFactor Inc. Message Board

  • sfa233ferg sfa233ferg Nov 16, 2012 5:36 PM Flag

    People in the Know Have Spoken

    I have talked to a former FF employee, a consultant in semis, and a person from the brokerage community who follows the company.

    First, there is no known technology that is going to replace probe cards, so the company is not going out of business. Most of all, there is a lack of confidence in the company after 3 years of not even being able to match costs with revenues, let alone be cash positive or show a profit, If the company can't be cash positive in Q1 '13, the feeling is the stock price will break 3 as prices tend to extrapolate trends into the future.

    The MicroProbe acquisition is viewed very positively, but the jury is out as to how aggressively management will leverage their market position and most importantly, reduce redundant cost centers.

    The BOD seems to be the heavy in all this if there is any blame to spread. Hand me the dice cup!

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    • Management just has to execute and there is tremendous upside potential.
      From these levels price could easily double or triple in the near term.
      Not long ago we were above 11 dollars with much less diversification and revenue potential.

      It is important that they develop relationships with their customer base and expand their business.

      Definitely in a price range for a takeover here.

      No debt. Very rough napkin numbers
      Lets say 150m revs for form and 100 for mp
      So 250 and apply a multiple of 1.5
      That is 375m
      Now add in cash of 180
      That is 555m
      Divide by 50m shares
      So buyout a little over $10 per share
      That does not include other assets/liabilities etc

      With cost savings, synergy-savings, right-sizing and some revenue growth that number could be much higher.

      • 1 Reply to petrofornow
      • FF needs to have better sales than you suggest.. They BE at $200M (the company was trying to lower its BE to $50M/qtr).. MP had a positive ebida at $100M but we never were told if MP was profitable. Therefore I go back to what was told me. There is a lack of confidence the company will move aggressively to raise prices, leverage customer contacts and reduce costs. A lack of positive cash flow in Q1 will hurt the stock appreciably as the company has had months to plan the inclusion of MP and a partial quarter to write off one-time charges related to severance and facility closings. How hard will the BOD push? There are many companies that look like asset bargins such as FF, but if they are not increasing revenues and showing positive cash generation, they are known as "value traps".

        As a positive, Davidson has a price target of $10 as of Nov 1.

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