One Guy's Investments: Annual Checkup -- FORM

There hasn't been much to say about Formfactor (FORM -- free RT quote) in the last couple of months since their earnings release and conference call. The price hasn't changed much since then, either, except for a little blip when Jim Cramer featured Formfactor on Mad Money as a play on Korea. (Which I still don't get, by the way -- their key new manufacturing plant and headquarters are both in California, though some of their customers are Korean. If you want Korea, buy EWY, Samsung, Hyundai, Kookmin Bank or Posco, as far as I'm concerned). I don't plan on buying or selling any additional FORM shares early this year, but I will be watching their next couple of months quite closely -- the first quarter is when they're supposed to have their new facility fully online, and that will be the key to increasing margins (new faciity is more efficient) as well as bringing an end to this year or two of capped sales as they have been constrained from increasing production. After their last call, I was very optimistic about the progress in bringing the new fab online, but as we have seen with this company over the past year there's always potential for bad things to happen to this snakebit transition to the new factory. FORM should continue to prosper and hit new levels of growth in the coming year as more and more semiconductor manufacturers produce broader product lines on tighter schedules and at lower prices, all of which demand the highest quality in-line semi test equipment available. No one has better technology than Formfactor, and no one else can supply this type of testing equipment for virtually all types of semiconductors as FORM can. Barring huge problems with their new plant, or unexpected patent problems, FORM should be able to leverage the huge upswing in semiconductor manufacturing and continue to increase earnings.

Labels: FORM