FormFactor, Inc. (FORM)

carlosgg (85.83) Submitted: 3/14/08 3:11 PM : Start Price: $17.23 FORM Score: 8.99

1 - Market leader in wafer testing.

2 - Valuation seems really cheap almost any which way: EV/Revenue = 0.7, EV/EBITDA = 2.55, EV/FCF = 5.5, P/E = 11.5, PEG = 11.5/21.3 = 0.54, Price/Book = 1.1 (zero goodwill), almost 70% of the valuation is supported by cash ($11.7/share as of Q407, zero debt). Seriously how much lower can they go? Actually theis should have been my number one argument.

3 - No-nonsense CEO that founded the company in 1993 (and co-founded Tessera).

They have been hit by the double whammy of absolute-rock-bottom DRAM prices and a glitch in the development of their latest product, Harmony. DRAM is the majority of their business, 70 or 80 percent I think. As a result, their Dec-07 quarter EPS came in 26% below Dec-06 quarter and they have guided for a small loss in Q108, also worse than the previous year's quarter.

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