Nanometrics Inc. (NANO) designs, manufactures, markets, sells and supports thin film, optical critical dimension, and overlay dimension metrology systems. The Company offers metrology systems, which include standalone and fully automated systems for high-volume semiconductor manufacturing process control; integrated systems incorporated onto semiconductor and solar photovoltaics (PV) processing systems that provide real-time measurements and feedback; and standalone manual and semi-automated systems used to monitor material characteristics of various silicon and compound semiconductor devices and substrates. The Company’s products also include fourier-transform infrared and photoluminescence metrology systems. Its products are used primarily in manufacturing of semiconductors, solar PV, and high-brightness LEDs, as well as by customers in silicon wafer and data storage industries.

Founded in 1975, NANO is headquartered in Milpitas, California.

Source: Reuters.com, SEC Filings.

For the second quarter ended June 27, 2009, NANO reported revenues of $14.5 million, up 44% from $10.1 million in the first quarter of 2009 and down 39% from $23.8 million in the second quarter of 2008. Gross margin increased to 41.4%, compared to 28.3% in the prior quarter. While the sequential improvement can be attributed to improved factory absorption and higher sales volume, NANO’s gross margin also came in slightly lower compared to 42.4% in the year-ago period, attributable to decreased sales volume being largely offset by improvements to cost structure.

For the six months ended June 27, 2009, revenues were $24.6 million, down 58% from revenues of $58.5 million in the year-ago period. Gross margin was 36% compared to 44.3% for the first six months of 2008, attributable to decreased sales volume and lower factory utilization, partially offset by improvements to cost structure.

In 2008, NANO’s cash reserves rose by 60.73%, or $9.06 million. The Company’s cash flow from financing totaled $11.83 million or 11.58% of revenues, while it generated $3.97 million in cash from operations, and used a total of $5.97 million in cash for investing. The Company has a Debt to Total Capital ratio of 0.18%, a higher figure than the previous year’s 0.00%.

Source: Reuters.com

Analysts polled by Thomson Reuters expect shares of NANO to “Outperform.” The details of the analysts polled are as follows:

Source: Reuters.com

Since its founding in 1975, NANO has grown to become a leading process control metrology company. NANO’s process control solutions address the critical metrology information necessary for comprehensive, successful advanced process control strategies. Its diverse product offerings provide a vast breadth of metrology capabilities used across major semiconductor manufacturing process areas, including CMP, CVD and Lithography/Etch.

NANO’s product lines offer an extensive array of proprietary technologies in optics, software and systems integration designed to meet the process control requirements of today’s advanced semiconductor technologies. These process control solutions are implemented on common metrology platforms that can be configured with a variety of measurement technologies, or as a single technology targeted for a specific process control application.

Its products are used primarily in manufacturing of semiconductors, solar PV and high-brightness LEDs, as well as by customers in silicon wafer and data storage industries. The Company’s customers include Applied Materials, Hitachi, Hynix Semiconductor, Samsung Electronics, SMIC and Toshiba Semiconductor (11%).

Products and Services

Together with its subsidiaries, NANO designs, manufactures, markets, sells and supports thin film, optical critical dimension, and overlay dimension metrology systems. It offers metrology systems, which include standalone and fully automated systems for high-volume semiconductor manufacturing process control; integrated systems incorporated onto semiconductor and solar photovoltaics (PV) processing systems that provide real-time measurements and feedback; and standalone manual and semi-automated systems used to monitor material characteristics of various silicon and compound semiconductor devices and substrates. The Company’s products also include fourier-transform infrared and photoluminescence metrology systems.

Company Highlight

It is forecast that the global semiconductor market, which is currently impacted by the gloomy financial environment, will soon rise as the world’s strong economies find ways to starve off recession. The 2009 forecast may not be a good news the semiconductor market but a new analysis is giving hope. A research report available at Electronics.ca Publications forecasts that the global semiconductor sales will surge at a CAGR of 6.7% through 2012, surpassing $310 billion.

The upbeat forecast reflects the growing need for metrology systems that enable the fabrication of advanced semiconductor devices, as well as high brightness-LEDs, solar photovoltaics and hard drives.

While reporting mixed results for the second quarter of 2009, NANO said it has increased its commitment to outsource manufacturing, as well as to remain steadfast in its commitment to deliver improved performance over the last several quarters amid the global economic and industry downturn. While experiencing a significant decline in its core business over the last several quarters, NANO remains focused on restructuring its operations to improve efficiency, strengthening its competitive position within its served markets, as well expanding its served markets.

NANO has greatly expanded its markets through strategic acquisitions. Through the recent acquisition of Zygo’s Semiconductor Solutions Business, NANO has expanded into Advanced Packaging, as well as enhanced its FEOL offering. Last year, the Company announced it acquired Tevet, enabling the company to penetrate the high-throughput large-format Solar PV market.

On July 22, NANO unveiled the TSM integrated metrology system, the newest metrology system for solar PV applications. The latest in the Company’s Trajectory product line is designed to rapidly measure the thickness of various thin films in order to enable fast feedback and excursion prevention in the manufacture of all types of solar photovoltaic (PV) cells.

NANO says its footprint in the fab continues to increase with the introduction of several innovative new products. The Company has more than 6000 installed in nearly every semiconductor manufacturing facility in the world.

On August 3, the Company announced multiple system order for Caliper Mosaic™ Overlay Metrology Systems from a leading DRAM manufacturer for high-volume lithography process control. In addition, the customer will also purchase licenses for the Blossom overlay target technology. According to Nigel Smith, director of Overlay Product Technology at NANO, the Blossom overlay mark, when used in conjunction with Caliper Mosaic systems, enables customers to extend their known metrology technologies while continuing to leverage improvements in precision and throughput.

NANO was recently selected as a recipient of the 2009 R&D 100 Award for its innovative Advanced Film Capability (AFC) technology module, which enables measurement of thickness and optical properties of the individual layers in complex film stacks for in-line process control of semiconductor manufacturing, incorporated in the UniFire line of metrology systems. When incorporated as an option in the UniFire 7900, the technology module combines high-precision film metrology with the industry’s smallest metrology targets, thereby enabling direct sampling of relevant customer features/structures.

Oppenheimer recently upgraded to Outperform from Perform, as well as increased its price target from $4 to $6.

NANO has traded between $0.80 and $4.24 over the last 52 weeks.

Currently, NANO is trading near its upper Bollinger Band, signaling that the stock price is high relative to its recent price action.

The MACD for NANO currently reflects a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9day moving average or signal line. This suggests that positive momentum has begun to slow.

SNEN has a negative Return on Assets of -5429%, compared with an industry average of -796%; Return on Investment of -63.92%, compared with an industry average of -8.73%; and a Return on Equity of -68.45%, compared with an industry average of -9.41%.

Source: Thomson Financial