UPDATE - ASML Q1 misses expectations, says orders strong
Wednesday April 21, 4:09 am ET
By Lucas van Grinsven, European Technology Correspondent
(Adds analysts' comment, share price)
AMSTERDAM, April 21 (Reuters) - Dutch chip equipment maker ASML (Amsterdam:ASML.AS - News) reported first-quarter profits and sales on Wednesday that fell short of forecasts but said new orders were flowing in strongly in a booming market.
ASML (NasdaqNM:ASML - News) is the world's largest maker of lithography machines which map out electronic circuits on silicon wafers, the heart of the chip manufacturing process.
"The upturn flickered in Q3 and caught hold in Q4 2003," said Chief Executive Doug Dunn, who is set to retire later this year.
"We've now seen three quarters of stong orders including this one. All indications suggest that orders will continue to be strong in Q2," he said.
"These are some of the most bullish comments that I've heard from him since 2002. It's good to hear him say it," said analyst Uche Orji at JP Morgan in London.
ASML made a first-quarter net profit of 21 million euros ($25 million), compared with a year-ago loss of 81.9 million euros and the average forecast of 24.6 million euros given in a Reuters poll of 11 analysts.
Sales rose to 453 million euros, whereas analysts had expected a rise of 60 percent to 509 million euros, but the average selling price per machine dropped 12 percent from the fourth quarter to 8.4 million euros as customers favoured older models that help them to quickly add capacity to meet urgent demand.
ASML's backlog of lithography systems on order rose to 163 as of end-March from 124 at the end of December and compared with a market forecast of 134 machines.
The total value of the backlog was 1.36 billion euros, with an average selling price of 9.6 million euros for new machines. "Sales and shipments in the first quarter were below expectations but the order book is much better than expected and the average selling price per machine which held down revenues in the first quarter is set to increase," said analyst Ewald Walraven at ING.
ASML shares had slipped 3.4 percent to 14.33 euros by 08005 GMT, underperforming the 0.6 percent lower DJ Stoxx Eurotech index (Zurich:^SX8P - News) and in line with U.S.-listed chip stocks (Philadelphia:^SOXX - News) which dropped 3.6 percent on Tuesday on interest rate hike concerns.
MARGINS ON THE RISE
Dunn said the company's profit margin was improving. "Our gross margin for the second quarter will further strengthen by two percentage points," he said.
The gross margin was 32.2 percent in the first quarter, up from 28.5 percent in the fourth quarter of 2003.
"The shortfall in sales and average selling prices is not very important, as it also entails better margins and more balanced use of ASML's production capacity," said analyst Bert Siebrand at Bank Oyens & Van Eeghen.
Demand for chip production equipment is rising as many customers are running at almost full capacity and strong demand for chips encourages chip-makers to expand production.
Shipments of chip-based consumer electronics products such as mobile phones and personal computers are growing in excess of 20 percent after more than two years at a virtual standstill.
ASML's backlog was made up of 135 new machines and 28 lower-priced refurbished systems.
The cheaper systems are slated for delivery within the next two quarters, and more expensive systems that can produce very thin circuits are expected to be a major part of revenues later.
ASML's customers include Intel Corp (NasdaqNM:INTC - News), the world's biggest chip maker, and Taiwan Semiconductor Manufacturing Co Ltd (Taiwan:2330.TW - News), the world's top contract chip producer.
The company returned to the black in the fourth quarter of 2003 as demand recovered and cost cuts kicked in from a restructuring, which cost over 1,000 employees their jobs.
On Tuesday ASML announced a new lithography tool that will produce thinner electronic circuits and smaller chips, giving it an edge over Japanese rivals such as Nikon Corp (Tokyo:7731.T - News) and Canon Inc (Tokyo:7751.T - News). |
