The following excerpts explain why Zacks senior electrical industry analyst Ken Nagy, CFA remains cautious on Electroglas, Inc. (EGLS), the automated wafer prober manufacturer:

'Electroglas is an original equipment manufacturer (OEM) of wafer prober and wafer test handling systems. August top and bottom-line results were in line with consensus estimates. While the long-term outlook in probers for EGLS is positive, the short-term is concerning.

'The shares are currently trading at a 1.3x multiple of our fiscal 2008 revenue estimate (P/S). Given the anticipated revenue level in the next quarter, the company is still below the breakeven point, and as such, the continued string of quarterly losses and cash burn will continue.

'We believe the likely reason for the sudden decision to change the fiscal year was made to mask another disappointing quarter. In conjunction with the termination of the company auditors, we would advise potential investors to be especially cautious.

'We remain concerned about the cash burn rate, which has improved, but remains in the range of $1-$2 million per quarter. Management has embarked on a new aggressive plan to lower breakeven to $14-$15 million (from $18-$19 million). We continue to rate shares of EGLS a Hold. We are setting the price target at $2.25, which corresponds to a P/S multiple of 1.2x our fiscal 2008 estimate.'