Thursday, December 28, 2006

Calls of Note Part 1

- Banc of America comments on FormFactor (NASDAQ:FORM) saying they are cutting near term 4Q06 and 1Q07 EPS to reflect a delay in the penetration of the new NAND. The cut brings them back in line with street estimates and guidance for the December quarter. Firm views this as only a timing issue for the one-touch-down NAND product. FY07 EPS goes to $1.71 from $1.85.

Even so, they remain very optimistic about the 2007 growth prospects for the company. They think FORM is in the final stages of qualifying their new one- touch-down product with several NAND flash customers. Thinks that Micron (IM Flash Technology) could release a $50 million order in the March-07 quarter (1Q07) and drive a sharp increase in June revenues.

After SEMICON Japan it was apparent that the pace of technology change in the probe cell (prober, probe card, tester) is accelerating. The rising cost of test is driving the industry to search for new solutions that are increasingly dependent on probe card technology. BAC thinks the value add in the probe cell will migrate to the probe card. Micronics Japan (MJC) has introduced an integrated prober-probe card product targeting the memory market. FormFactor is investigating adding tester functions to its advanced probe cards.

Maintains Buy but cuts tgt to $43 from $45.

Notablecalls: Not actionable but good to know category. BAC is taking down their Street high estimates but talks of the possible large order from MU. In sum, neutral.

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