FormFactor Inc. FORM reported first-quarter 2016 loss of 16 cents, a penny wider than the Zacks Consensus Estimate.RevenuesRevenues of $53.6 million were down 25.3% sequentially and 24.3% year over year. The decline was due to “two timing-related factors”. First, FormFactor increased its capacity at a slower-than-expected rate to meet increasing demand for System on Chip (SoC) probe cards, which have now been rectified. Second, the company witnessed push-outs of DRAM probe card deliveries by certain customers.However, the figure was roughly in line with the Zacks Consensus Estimate of $54.0 million and the revised company guidance of $53.0 million to $54.0 million.All the three segments — System on chip (SoC), DRAM and Flash — decreased sequentially. Region-wise also, a decline was seen in all except for Europe/Middle East which improved from the last quarter as well as from the year-ago quarter.Revenues by GeographyAsia Pacific contributed 30.2% to first-quarter revenues (down 27.7% sequentially and 33.9% year over year); North America accounted for 32.8% (down 12.9% sequentially and 4.9% year over year); South Korea brought in 16.6% (down 49.1% sequentially and 47.3% year over year); Europe/Middle East contributed 14.6% (up 50.0% sequentially and 41.8% year on year); and Japan accounted for the remaining 5.8% (down 52.3% sequentially and 42.6% year on year).Revenues by End UserSoC revenues were $36.1 million, down 12.8% from the prior quarter but up 8.1% from the year-ago quarter.Reported revenues for DRAM products were $16.3 million, down 42.2% sequentially and 52.9% year over year.Flash revenues were $1.2 million, down 45.5% from the previous quarter and 57.1% from the year-ago period.MarginsNon-GAAP gross profit was $11.9 million, down from $23.9 million in the last quarter. The gross margin was down significantly both sequentially and year over year. The decrease was attributed to lower revenues and an unfavorable product mix.Operating expenses adjusted for restructuring, acquisition, amortization, integration and asset impairment charges came in at $20.7 million, down 2.7% sequentially and 7.6% year over year. Operating margin of 16.4% was down sequentially as well as year over year.Pro-forma net income was ($9.1) million in the first quarter compared with earnings of $2.8 million in the previous quarter and $3.0 million in the year-ago quarter.On a GAAP basis, net loss in the first quarter was $13.8 million (loss of 24 cents) against net income of $0.78 million (earnings of 1 cent) in the year-ago period.Balance SheetFormFactor exited the quarter with cash (comprising cash, short-term investments, and restricted cash) of $187.2 million, up from $146.3 million reported in the prior quarter.Cash usage in the first quarter was $0.4 million versus cash generation of $3.8 million in the prior quarter.2Q GuidanceManagement expects second-quarter 2016 revenues in the range of $76–$80 million; non-GAAP gross margin of 34–37% and non-GAAP fully diluted earnings per share of 10–14 cents. Cash flow is forecast to be positive $4 million to $6 million. The guidance excludes the impact of the Cascade Microtech acquisition.Our RecommendationFormFactor is an original equipment manufacturer of automated wafer probe cards used in the semiconductor integrated circuit manufacturing process.The Advanced Probe Card market is a structurally attractive area of the semiconductor supply chain. The Cascade Microtech acquisition which is expected to close by mid 2016, will further expand FormFactor’s product portfolio to better serve the production probe card and engineering systems markets. Also, the company expects the buyout to be accretive to earnings.On the cost and efficiency front, the company is focusing on arranging its resources and investments more broadly across the SoC, DRAM and Flash probe card markets. This should help it to contain costs better while targeting growth opportunities across markets. This will eventually benefit FormFactor’s market share, revenues and gross margin.FormFactor carries a Zacks Rank #5 (Strong Sell). Investors may consider stocks such as Advanced Micro Devices AMD, Mercadolibre, Inc. MELI and Broadcom Limited AVGO, each of which carries a Zacks Rank #2 (Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report MERCADOLIBRE IN (MELI): Free Stock Analysis Report FORMFACTOR INC (FORM): Free Stock Analysis Report BROADCOM LTD (AVGO): Free Stock Analysis Report ADV MICRO DEV (AMD): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research