FormFactor Q3 Results OK, But Inventory Accounting Issues Leaves Stock Reeling

FormFactor (FORM), which makes semiconductor test equipment, disclosed today that it has found some inventory related accounting issues:

Management believes that adjustments to inventory valuations may be required with respect to periods prior to the third quarter of 2007,” the company said in a statement. “These potential adjustments could change inventory, gross margin, operating margin and net income from the amounts previously reported for the affected periods.

FormFactor said it has has not yet determined the magnitude of these adjustments or whether the adjustments will be reflected in the third quarter financial statements or in a restatement of the affected periods.

The company said revenue for the third quarter was $125.3 million, which was a tad below the Street consensus of $125.6 million. It did not report an official EPS number, due to the accounting problem, but said it believes EPS should be 38-40 cents, consistent with previous guidance.

In after hours trading, FormFactor dropped $5.77, or 13.3%, to $37.47.