Bloomberg News

ASML Gains on Forecast of Higher Profitability After Orders Rise

July 18, 2012

ASML Holding NV (ASML), Europe’s biggest semiconductor equipment maker, reported orders that beat analyst estimates and said technological advances will boost business in the longer term. The shares rose 6.8 percent.

Second-quarter net bookings climbed 9.8 percent from the first quarter to 949 million euros ($1.16 billion) excluding second-generation extreme ultraviolet lithography systems, the Veldhoven, Netherlands-based company said in a statement today. That exceeded analysts’ average estimate of 898 million euros in a Bloomberg survey.

The rise of products such as tablet computers and Internet- surfing phones is helping fuel demand for ASML’s machines, which make the chips needed to run such devices. The company said it plans to ship its first EUV production system, which enables the production of smaller and more powerful chips, “by the end of this year or early next year.”

ASML has “solid growth prospects from EUV technology in 2013 and beyond,” James Crawshaw, an analyst at Standard & Poor’s, said in a note today. The company also has a “strong competitive position in the lithography market as evidenced by the recent investment made by Intel,” said Crawshaw, who maintained a hold recommendation for the stock.

ASML shares climbed 2.81 euros to 44.23 euros at the close of Amsterdam trading. The stock has gained 36 percent this year.

Rising profitability

Profitability will grow “steadily,” Chief Executive Officer Eric Meurice said on a conference call today. “We are anchored by the short-term 2012, and by the mid- to long-term lithography market,” which is driven by a huge “technology transition appetite” in the industry.

Intel Corp. (INTC:US), the world’s largest chipmaker, last week agreed to invest as much as $4.1 billion in the Dutch company to speed up development of new production techniques and take a stake of as much as 15 percent. ASML said it’s discussing similar investments with Samsung Electronics Co. (005930) and Taiwan Semiconductor Manufacturing Co. (2330)

ASML supplies machines to chipmakers including TSMC and Intel, which yesterday scaled back its revenue forecast amid slower personal-computer demand in the U.S. and Europe. Applied Materials Inc. (AMAT:US), ASML’s U.S. rival, on July 10 cited weaker demand in Europe and China as a reason why it won’t reach earlier revenue and profit projections.

Memory Chips

ASML’s second-half net sales will be in a range of 2.2 billion euros to 2.4 billion euros, the company said today. That compares with an average 2.45 billion-euro estimate of analysts in a Bloomberg survey and the 2.67 billion euros in revenue reported a year earlier.

Second-half sales will reflect demand for NAND memory chips, which in turn hinges on the success of new ultrabook computers and smartphone deliveries, Meurice said in the statement.

ASML scheduled an extraordinary shareholder meeting for Sept. 7 to discuss the agreement with Intel.

The company said it expects to maintain sales minus production costs at about 43 percent of revenue in the third quarter. Net income in the three months through June rose to 292 million euros from 282 million euros in the previous quarter.

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net

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


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