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Technology Stocks : ASML Holding NV -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (1026)	10/12/2005 8:04:21 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 43353

UPDATE 3-ASML sees stronger 2006 as profit beats forecast Wed Oct 12, 2005 05:58 AM ET (Adds CEO, CFO comment) By Lucas van Grinsven AMSTERDAM, Oct 12 (Reuters) - Dutch chip equipment maker ASML (ASML.AS: Quote, Profile, Research) forecast a strong 2006 as it grabs market share from competitors with new products amid a tentative chip sector recovery, sending its shares higher. The company predicted stable orders in the fourth quarter as it reported forecast-beating third-quarter results on Wednesday. The world's largest maker of semiconductor lithography machines that map out electronic circuits on silicon wafers received orders for 46 new tools in the third quarter, above forecasts of 34.5 machines and well above a second-quarter dip of 24 systems when chip makers were very cautious to invest. Order intake is an important gauge for future sales, and ASML was bullish it could grow again next year, although it declined to say by how much. "We believe the first half of 2006 will be strong," Chief Executive Eric Meurice told journalists. He later said he "clearly" expected growth in the full year as a result of stable revenues combined with market share gains due to new customers and new technologies that only ASML can supply. Shares in ASML opened flat but rose 2.95 percent to 13.98 euros by 0956 GMT after ASML's upbeat statements for 2006. They outperformed the 0.5 percent lower Eurotech index . The shares have risen 15 percent this year, virtually in line with the wider tech index. Despite sluggishness earlier in the year, cost cuts allowed ASML (ASML.O: Quote, Profile, Research) to make a net profit of 48 million euros ($57.7 million), above last year's 40.9 million euros and the average projection of 37.7 million in a Reuters poll of 25 analysts. The slowdown was evident in third-quarter revenues of 533 million euros, against year-ago sales of 611 million, but still ahead of a forecast of 512 million. BOOKINGS AHEAD The systems that were booked in the third quarter had an average price of 15.8 million euros apiece -- the price of a business jet. ASML said order intake would be around the same level in the fourth quarter of 2005 as in the third quarter, assuming contract chip makers in Taiwan and China restart ordering to expand capacity in 2006. "The order intake in particular is quite impressive. It indicates that 2006 may turn out to be a better year for chip equipment spending," said analyst Eric de Graaf at Petercam, putting his "reduce" recommendation under review. He added ASML had orders for 10 state-of-the-art immersion lithography machines, which can make thinner circuits and smaller chips than traditional systems and cannot yet be supplied by its rivals. ASML is therefore gaining market share, and its competitors may not be doing as well. It has also signed up its fifth customer in Japan, which until recently was a fortress dominated by Nikon Corp (7731.T: Quote, Profile, Research) and Canon Inc (7751.T: Quote, Profile, Research) . Chief Financial Officer Peter Wennink said he expected ASML's global market share to end between 55 and 60 percent this year and rise further in 2006. Rabo Securities analyst Niels de Zwart agreed chip makers are becoming more optimistic about 2006, but added they are still ordering cautiously. "It's not a roaring recovery." He pointed out the new systems expected to be ordered in the fourth quarter had an average price of 13 million euros, below the third-quarter level of 15 million, which indicated demand for less advanced machines for mass volume chip production. This is a normal development when the chip sector is moving into a recovery phase, but Wennink nevertheless said the fourth quarter dip was extraordinary deep. "Q4 is highly incidental," he said, adding that prices should rise in quarters after that. ASML's share price had been held back earlier in the day because of the low selling prices seen in the fourth quarter. The gross margin in the fourth quarter would be between 36 and 38 percent, against 37 percent in the third, ASML said. ASML has roughly half the world market for lithography systems and competes with Japan's Nikon and Canon. Its customers include the world's largest chip maker Intel Corp (INTC.O: Quote, Profile, Research) and Taiwan Semiconductor Manufacturing (2330.TW: Quote, Profile, Research) , the world's largest contract chip maker.