Electroglas drops strip test tool, antes up for 300mm prober market

September 26, 2006 – Electroglas Inc. has suspended its efforts in the strip test market, and is putting its hopes for future growth in its EG6000 300mm prober.

In a conference call with press and analysts announcing the company’s fiscal 1Q06 results, Thomas Rohrs, Electroglas chairman and CEO, noted that there had been “zero revenues” for the company’s Sidewinder strip test business during the past two quarters and only two tool sales since development began five years ago — just for a niche market that VLSI Research pegs as only a $17 million market. “We can’t see continuing to invest in the Sidewinder product line when the 300mm market is flush with opportunities,” Rohrs said.

Instead, Rohrs cited several examples where the company believes its future lies — its new EG6000 prober — citing customer wins at the Hynix/STMicroelectronics JV in China, Amkor, and Taiwan wafer test company KYEC. EGLS will ship 10-12 of the 300mm probers next quarter (likely including several large orders), and should see 30%-40% sales growth/quarter thereafter, he noted.

The company took a $3.4 million writeoff in 1Q06 (shaving about $300-$400K off quarterly run rates) and will reallocate some software and engineering resources to the company’s EG6000 efforts, where it sees significant future growth. Rohrs noted the company will narrow its focus and finances to gain 300mm market share and “get back a key position in the prober market, which Electroglas helped to create.”

Initial efforts will be penetration into SoC markets, with another version to come in the next six months or so targeting memory customers, who make up ~40% of the total prober market, according to Rohrs. He noted that “while we have spectacular indexing times” for probing SoCs, memory customers instead require much faster loading times, an area in which “we have some improvement to do.”

Rohrs also noted that Electroglas’ 200mm probers are still seeing some new sales and upgrades, and demand is holding steady despite an anticipated slowdown in semiconductor equipment investments and a trend toward 300mm wafer processing. “The 200mm family, service/spares, are what’s sustaining the company,” he said, but gaining share in the 300mm market, “that’s the growth engine for the company.”

In the conference call, Electroglas CFO Tom Brunton projected fiscal 2Q06 revenues would be flattish with 1Q06 in a range of $12.5-$15.0 million, with gross margins improving to around 35%, up from just 14.6% in 1Q. The company posted a $5.8 million net loss in 1Q06 on sales of $13.5 million, vs. a $3.9 million loss a year ago on $9.7 million in sales.


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