What happened 

Semiconductor test equipment specialist FormFactor (NASDAQ:FORM) trailed the market last month by shedding 11% compared to a 0.4% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

^SPX Chart

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The decline left shares down by roughly 12% so far this year, compared to a 10% increase in the broader market.

So what

Investors weren't excited about the short-term operating outlook that FormFactor provided in a conference presentation early in the month. Specifically, the company still sees sales falling by about 7% in the third quarter as non-GAAP earnings decline roughly 32% to between $0.20 per share and $0.26 per share. These figures affirm the forecasts that executives issued as part of FormFactor's second-quarter results in early August.

An engineer inspects a semiconductor chip.

Image source: Getty Images.

Now what

CEO Mike Slessor and his team say sales challenges at two large customers should lead to lower revenue in fiscal 2018. Looking further out, though, management is committed to an operating model that's characterized by stronger profitability, cash flow, and revenue. FormFactor is hoping that design wins in areas such as data-center chips, mobile device displays, and autonomous vehicles will drive these gains. But now it's up to the company to show progress toward improved financial results.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.