UPDATE 3-ASML upbeat on recovery as orders beat forecasts

* Bookings of 50 systems beats highest estimates

* Sees Q2 bookings value at around 1 bln euros

* May post record sales this year

* Shares up 1.5 pct, slightly outperforming main index

(Adds analyst comment, shares, background)

By Harro ten Wolde

AMSTERDAM, April 14 (BestGrowthStock) – Dutch chip equipment maker
ASML (ASML.AS: )(ASML.O: ) added to hopes for an acceleration in the
tech sector’s recovery with first-quarter orders that beat the
most optimistic expectations and a record sales outlook.

ASML’s results echoed positive signals from Intel Corp.
(INTC.O: ), the world’s largest chip maker and one of ASML’s
biggest clients, which said on Tuesday it was seeing increased
spending by corporations. [ID:nN1382801]

Analysts view ASML’s order book developments as a barometer
for expectations from the big chipmakers.

Earlier on Wednesday, Taiwan Semiconductor Manufacturing
(2330.TW: ), the world’s largest contract chip maker and one of
ASML’s clients, said it expected global chip sales to increase
22 percent this year and 7 percent next year. [ID:nTPV001425]

ASML shares were up 1.5 percent at 26.54 euros at 0813 GMT
in Amsterdam, slightly outperforming the European technology
index (.SX8P: ), which was up 1 percent.

The shares are up 17 percent so far this year, hovering
around 8-year highs of 27 euros.

“The fact that ASML is giving an outlook for the full year
confirms increasing visibility and management’s confidence that
revenue will continue to increase over the next quarters,” said
SNS Securities analyst Victor Bareno.

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‘STRUCTURAL UNDERCAPACITY’

ASML, the world’s largest maker of semiconductor lithography
machines, which map out electronic circuits on silicon wafers,
said on Wednesday it had booked 50 orders, valued at 1 billion
euros ($1.36 billion). That beat all of the analyst estimates in
a Reuters poll, which ranged from 40 to 48 systems.

Net profit more than doubled to 107 million euros from the
fourth quarter of 2009, while sales rose to 742 million euros
from 581 million euros in the previous quarter. ASML suggested
the industry needed more machines, which would suggest it can
look forward to pricing power in coming quarters.

“We are looking at a structural undercapacity in the
industry and we are just at the beginning of the recovery. We
think this has legs,” ASML Chief Financial Officer Peter Wennink
said in a video posted on ASML’s website.

Wennink also said ASML may beat record sales of 3.8 billion
euros reached in 2007. ASML booked just over 1 billion euros’
worth of systems in the first quarter and expects a similar
level of bookings in the second quarter.

“We are looking at a recovery which is more prolonged, which
is more sustainable and is driven by the fact of the
underinvestments of our customers over the last two to three
years and actually need this new capacity addition,” Wennink
said.

ASML, which competes with Japan’s Nikon Corp (7731.T: ) and
Canon Inc (7751.T: ) said it expected a second-quarter gross
margin of about 42 percent.

“Lack of strong Japan orders in 1Q, as well as somewhat low
foundry bookings, imply to us more is to come from Toshiba and
TSMC specifically, in addition to Korean memory makers,” UBS
analyst Gareth Jenkins said.

Stock Market Money

($1=.7351 Euro)
(Additional reporting by Gilbert Kreijger; editing by Jon
Loades-Carter)

UPDATE 3-ASML upbeat on recovery as orders beat forecasts