- Associated Press - Tuesday, August 31, 2010

LIVERMORE, CALIF. (AP) - FormFactor Inc., which makes semiconductor testing equipment, said Tuesday that its third-quarter revenue will miss expectations, sending the company’s battered stock down in afterhours trading.

The company said customers are taking longer to try out its new Matrix product family. The company has also turned away low-margin business and has had to quote longer lead times than customers requested.

The shares fell 11 cents, or 1.6 percent, to $6.89 in extended trading after the company’s warning. That compounded a loss of 24 cents in regular trading that saw the shares hit $6.98, their lowest level since the company went public in 2003.

FormFactor said it expects to report third-quarter sales of between $46 million and $48 million, instead of its previous guidance in the low- to mid-$50 millions. Analysts polled by Thomson Reuters were on average expecting $57.3 million in sales.

The company also said it intends to let its employees exchange some of their underwater options for ones with exercise prices closer to the current share price.

"Retaining our experienced employees is essential to executing our turnaround plan for FormFactor," said CEO Carl Everett.

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