FormFactor Takes A Hit

SAN FRANCISCO -- Shares of FormFactor ( FORM) took a beating Thursday, after the company revealed that it was reviewing its inventory valuation practices and warned of possible financial restatements.

The Livermore, Calif., company reported only partial results for its third quarter due to the accounting review, posting 29% year-over-year growth in its top line of $125.3 million.

FormFactor, which makes equipment for testing integrated circuits during the chip manufacturing process, cited strength in its DRAM and NOR flash memory businesses in the third quarter.

But the revenue growth was overshadowed by news of the accounting review. FormFactor's stock plunged roughly 18%, or $7.74, to $35.50, close to its 52-week low, in midday trading Wednesday.

"The Company is currently reviewing its historic practices with respect to inventory valuation in light of issues identified by the Company in the course of preparation of financial statements for the third quarter," FormFactor said in a statement.

As a result of the review, the company said that net income, gross margin, operating margin and inventory valuations may be different than reported for periods before the third quarter.

The company said it has yet to determine the magnitude of the restatements and is working to complete the internal review as promptly as practicable.

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