FSI International Inc. (NASDAQ: FSII)

FSI International Inc. (FSII) supplies surface conditioning technologies globally to manufacturers of integrated circuits and other microelectronics. The Company sells batch and single-wafer platforms for immersion, spray, vapor and cryokinetic cleaning products.

Founded in 1972, the Company is headquartered in Chaska, Minnesota.

Source: Reuters.com, SEC Filings.

Financial Summary

Source: Reuters.com, SEC Filings.

Analyst Consensus

The mean of two analysts surveyed by Reuters rate shares of FSII a “Buy.”

Analyst Recommendations and Revisions

Source: Reuters.com, SEC Filings.

Investment Highlights

The Company’s ability to increase revenue and profit depends on the overall strength of the semiconductor industry. Chip suppliers reported stabilizing second-half 2009 revenue levels. Industry revenue is expected to decline 13.3% in 2009, while 2010 revenue is anticipated to grow 12%, according to research firm Foster and Sullivan. Foster and Sullivan project revenue of $241 billion for the semiconductor industry in 2010.

Bellwether chip maker Intel Corp. posted better-than-expected third-quarter results, with revenue dropping only 8% year-over-year. Previous quarters exhibited drops of 15 and 26%. Revenue derived from supplying laptop and notebook manufacturers increased 19% year-over-year.

Big chip maker Texas Instruments also beat analysts’ expectations, with revenue growth surpassing previous quarters by 17% for two consecutive quarters.

Chip maker TSMC raised guidance in its latest reported quarter. TSMC contracts with the world’s leading semiconductor companies, and is considered a litmus test for the industry.

Hynix Semiconductor reported earnings in the third quarter of 2009 following eight quarters of losses. Samsung Electronics released record earnings for the third quarter of 2009 supported by higher chip prices.

The industry remains hopeful of further gains following the recent release of Microsoft’s Windows 7 as PC upgrades in the enterprise market switch to the new operating system. Intel Corp., Advanced Micro Devices Inc. and Synaptics Inc. are expected to benefit from the release of Windows 7.

Major semiconductor makers experienced strong revenue growth from their netbooks and laptops products in the first half of 2009, buoying top-line as well as bottom-line growth within the industry.

Other trends likely to benefit the industry in the coming years include government-mandated upgrades to energy efficient chip in the PC industry; the roll-out of smart meters needed to monitor end-user electricity usage; and public acceptance of alternative energy devices, equipment and components which will require microchips.

Additionally, semiconductor capital equipment and materials makers Applied Materials and KLA-Tencore posted better-than-expected second half of 2009 results.

The Company expects gross margin rates of between 41% and 43% in the coming second quarter of 2010 as well as a higher capacity utilization rate due to expected increases in shipments. Selling, general and administrative expenses are expected to total between $3.8 million and $4.0 million in the second quarter of 2010.

Technical Analysis

Source: http://stockcharts.com/h-sc/ui?s=FSII

FSII trades above its 13-day moving average. This bullish sign is less significant because the 13-day moving average trends downwardly.

The MACD for FSII currently indicates a bearish signal. The MACD is below the signal line, a 9-day moving average of the MACD. The MACD is, however, above the critical level of 0, which implies the past price action had been positive. Overall, the chart is bullish.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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