Image source: FormFactor.

FormFactor (FORM 0.75%), a semiconductor probe card products manufacturer, is set to release its fourth-quarter results on Feb. 10 after the market closes. During its last quarterly report, FormFactor stated that weakness in the PC industry was pressuring demand for its products as revenue from each of its business segments declined year over year. Total quarterly revenue declined 11% when compared to the year-ago period.

Despite the slowdown, its management team was projecting better times ahead in the fourth quarter and issued a mildly bullish forecast. At the time, the company was seeing an uptick in demand for its products during what is normally a seasonally weak period. It credited the change to gaining market share in its business segments.  

We won't know if that trend persisted throughout the entire quarter until the company reports, so when it does, here are three areas investors will want to watch.

The headline numbers
On its last call, FormFactor's management team predicted that its revenue would land between $68 million and $73 million for Q4 of 2015. That would be about flat when compared with the $71.3 million in revenue that it reported in the fourth quarter of 2014, and would be a nice reversal from the big decline that it reported last quarter. 

Turning to the bottom line, the company believes that its fully diluted non-GAAP earnings per share will be between $0.07 and $0.12 per share in the quarter, the midpoint of which suggests a modest decline from the $0.11 per fully diluted share it reported a year ago. Management is also targeting at least $4 million in positive cash flow for the quarter, which would be a bit worse than the $9.5 million it generated a year ago.

FormFactor does have a history of surprising investors on the upside. Can it do so again?

Putting capital to work
On its last investor call, FormFactor CEO Michael Slessor stated that he's looking at M&A as a way to put the company's huge cash hoard -- which stood at $184.3 million at the end of the third quarter -- to work. In particular, he is on the hunt for acquisitions that will be accretive to earnings per share in the first year after the deal closes and that are a good strategic fit within its areas of expertise. The company has yet to make any announcements, so it will be interesting to hear if it's still shopping for ideas, especially now that the stock market is off to a rough start for the year and any potential companies on their radar would presumably be cheaper.

In the meantime, it continues to use its strong balance sheet to buy back shares at a modest pace, as it spent $3.5 million last quarter to repurchase 473,000 shares. That's nice, but it didn't do shareholders much good as it spent $3.1 million on stock-based compensation during the period, so its diluted share count didn't decline much.

Will the company use its financial strength to bulk up its share repurchase activities? Or is it keeping its cash balance high to fund any potential deals? Investors should keep an eye out.

Market conditions and guidance
Finally, investors should listen in for clues as to where management believes the industry is heading in 2016. One of its key customers, Micron (MU -0.60%), recently reported that it expects to post a loss in the coming quarter because of falling prices in the DRAM and NAND chip markets. That has caused Micron to go into cost-cutting mode, which could put a damper on FormFactor's near-term prospects. Micron was responsible for 15% of FormFactor's total revenue in 2014, and it's never good to see a key customer struggle.

Will that cause management to predict that the next quarter will be lean, or does it expect other customers to pick up the slack? We should have our answer in a few days' time.