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

To: niek who wrote (1177)	7/27/2006 3:45:33 PM
From: etchmeister	Read Replies (1) \| Respond to of 42810

niek - is that a correct statement (30% down)? Timothy Arcuri, Citigroup Global Markets Hi. Two things, first of all Steve, it would seem that with (ASML) this morning talking about orders being down roughly 30% sequentially for you know, calendar Q3, it would seem that maybe you know, the orders that you are seeing in September and December are kind of the last gasp to kind of fill up all that little you know, tools that have been ordered during the first half of the year. So it would seem that the conversation should shift to what the margins are going to look like during a down shift in shipments and in revenues, so I am wondering if you did $320 million in revenue much like you did during the 12th of ‘04, would your operating margin be -– would you be able to hold it at that same 19%? Steve Newberry Well, I think that’s a good question. I think certainly the ability to do that exist in the flexibility in our model. Whether we will choose to do that is another thing given the timing of whatever adjustments occur in the cycle because our purpose in 2007 is going to be about getting our new clean product, continually positioned about getting our bevel cleaner out there and about getting our patterning tool, and so we are very focused that one of our big priorities in 2007 is on product positioning and we will spend the necessary R&D and other operating expenses to achieve that. Now we would expect that our margin profile would be similar to what we were able to achieve from the highs in ‘04 and then to the lows in ‘05 where we kind of came off in terms of margins from the 52% we dropped down to about 48% - 48.5%. So I would expect our gross margins would stay up with potentially some impact in terms of how much revenue we take on some of the new product introductions which we would expect -- some of them would be potentially lower margins in our corporate average, but I think the real swing will be how much investment we need to continue to make to ensure that we get our products positioned the way we want to in ‘07 because we are really not going to be focused on the short-term of ’07 as much as we are making sure that we can get the product positioning that will give us accelerated revenue and profitability growth in ‘08 as those new products gain traction and increase in volume. seekingalpha.com