Bloomberg News

ASML Stock Falls on Third-Quarter Outlook of Drop in Orders

July 13, 2011

(Updates with analyst’s comment in 10th paragraph.)

July 13 (Bloomberg) -- ASML Holding NV, Europe’s biggest semiconductor-equipment maker, fell the most in 2 1/2 years in Amsterdam trading after saying orders will drop in the third quarter because of concerns that economic growth will slow.

Sales contracts in the period probably won’t exceed 500 million euros ($704 million), the Veldhoven, Netherlands-based company said in a statement today. That compares with 1.3 billion euros a year earlier. Second-quarter new orders, excluding advance sales of technology being introduced, amounted to 840 million euros, lower than the company’s forecast range of 900 million euros and 1 billion euros.

“The outlook for third-quarter orders is worse than expected,” Jos Versteeg, an Amsterdam-based analyst at Theodoor Gilissen Bankiers, said. “It indicates sales in 2012 will definitely be lower.”

European services and manufacturing growth slowed in June as leaders in the region struggled to contain a worsening debt crisis. Nokia Oyj, the world’s second-largest maker of mobile phones by revenue, abandoned 2011 earnings targets on May 31, while Samsung Electronics Co., the world’s biggest television manufacturer and an ASML customer, posted a 26 percent drop in second-quarter profit following a slump in flat screen sales.

Outlooks ‘Toned Down’

Expectations of high mobile-phone and personal-computer sales “actually had to be toned down,” ASML Chief Financial Officer Peter Wennink said on the company’s website. Doubt about economic development “creates uncertainty, which currently reflects the hesitance of our customers.”

ASML dropped as much as 2.15 euros, or 8.4 percent, to 23.55 euros, the biggest intraday decline since Dec. 18, 2008, and was 4.5 percent lower as of 12:27 p.m., valuing the manufacturer at 10.9 billion euros.

Second-quarter net income surged 81 percent to 432 million euros as sales jumped 43 percent to 1.53 billion euros. Profit had been foreseen at 411.6 million euros on sales of 1.5 billion euros, according to the average of analyst estimates compiled by Bloomberg.

ASML said it’s sticking to a forecast for 2011 of revenue “clearly above” 5 billion euros. Third-quarter net sales will total about 1.4 billion euros, including delivery of two second- generation EUV, or extreme ultraviolet, lithography systems for about 80 million euros with a zero profit margin.

‘Clear’ Slowdown

“It is clear the industry is heading for a slowdown,” said Victor Bareno, an analyst at SNS Securities, adding the drop in orders is more pronounced than he had expected. At the same time, ASML’s remarks about the EUV revenue are positive, he said. Bareno reiterated his buy recommendation on ASML’s stock.

In the second quarter, ASML booked six orders for an EUV pre-production tool, which has an average selling price of 42 million euros, and 10 orders for an EUV volume-production machine priced at 65 million euros. The volume equipment will be delivered starting in mid-2012, Chief Executive Officer Eric Meurice said in the statement.

ASML is the world’s largest maker of machines to project lines on the silicon slices from which chips are made. Its main competitor is Japan’s Nikon Corp. Applied Materials Inc., based in Santa Clara, California, is the world’s largest maker of semiconductor equipment.

--Editors: Tom Lavell, Thomas Mulier.

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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