UPDATE 1-ASML could pay dividends if bigger, less cyclical
Thu Mar 23, 2006 10:12 AM ET
(Adds CEO comment on takeovers and LCD)
By Lucas van Grinsven, European Technology Correspondent
EINDHOVEN, Netherlands, March 23 (Reuters) - Dutch chip equipment maker ASML (ASML.AS: Quote, Profile, Research)(ASML.O: Quote, Profile, Research) said on Thursday it would consider paying a dividend once it became a bigger company in a less cyclical semiconductor industry.
The world's top maker of chip lithography equipment, which competes with Japan's Nikon Corp (7731.T: Quote, Profile, Research) and Canon Inc (7751.T: Quote, Profile, Research), had a net cash balance of 1 billion euros ($1.21 billion) at the end of 2005 and it vowed to return any surplus cash to shareholders.
"Dividend implies a steady cash outflow, and our cash flow may still differ year by year," Chief Financial Officer Peter Wennink said at the annual general meeting of shareholders.
"Because we want to grow and because we still live in a cyclical industry, we have opted for share repurchase rather than dividends," he said.
"This doesn't mean that once we've grown to a 5 billion-euro-a-year company (in terms of sales) in a less cyclical business we could not move to that (dividend payments)," he added.
Wennink said ASML was now busy setting up a mechanism to carry out share buybacks.
The company reiterated it is aiming to double sales to 5 billion euros a year by 2010.
ACQUISITIONS
Chief Executive Eric Meurice said the company was looking to acquire companies that could provide technology related to chip lithography.
"In the area in which we are active, lithography, we see small opportunities. We're looking at businesses' plans. Nothing immediate, but not at sizes which are disruptive," he said, pointing out that any takeovers would be relatively small.
ASML would wait several years to look at investments and acquisitions of companies in areas adjacent to lithography.
"It is our duty, after 2010 or so, to look at ... activities that offer synergies. It adds size and it reduces risk," he said.
One adjacent investment area which may surface earlier is the production of LCD flat-screen manufacturing equipment, a market currently dominated by Canon and Nikon.
ASML has developed a rival LCD production technology, but it put this on ice last year when it found potential customers such as Samsung (005930.KS: Quote, Profile, Research) would not commit themselves with sufficient orders.
Meurice said his company might reconsider that decision in the coming year.
"We confirm that our technology is accepted by customers, but they are not yet courageous (enough) to deliver commitment. We need more security and more commitment. We may come back in six months time or a year, because we have the technology in our drawer," he told shareholders. |
