UPDATE 4-ASML Q3 bookings fuel tech recovery hopes

Published: 14 Oct 2009 07:20:21 PST

* Chip equipment maker swings to 20 million eur net profit

* Q3 new machine bookings 777 mln eur, beating top f'cast

* Sees Q4 sales around 550 mln eur

* Echoes Tuesday's strong earnings from key client Intel

* Shares reverse gains, down 3.6 percent, off 23-month high

(Rewrites, adds fund manager comment, updates shares)

AMSTERDAM, Oct 14 - ASML's ramped up third quarter order bookings well ahead of expectations as customers boosted investments but shares in the Dutch chip equipment maker reversed in late trading Wednesday as analysts said some of the good news was already priced into the stock.

Echoing strong earnings overnight from one of its main clients -- world No. 1 chip maker Intel -- that fuelled hopes of a tech sector recovery, ASML said it registered bookings for 35 new machines worth a combined 777 million euros ($1.2 billion).

That beat average expectations of 637 million euros and the highest forecast of 716 million euros in a Reuters poll.

ASML shares, which have gained almost 70 percent this year, rose 3.8 percent in early trade, hitting a 23-month high as one of the top gainers in the DJ Stoxx European technology index.

But by 1421 GMT the shares were down 3.6 percent, lagging the index, which was up 1.6 percent.

Petercam analyst Eric de Graaf said end-demand for chips had not yet shown signs of fundamental improvement while Corne van Zeijl at SNS Asset Management said shares were down because large investors in the United States were taking profits.

"Everybody expected good results and now that is the case, the party is over," he said.

Intel's rosy outlook bolstered expectations of a sector-wide upturn, as did speculation on Wednesday that German tech and engineering conglomerate Siemens -- a bellwether of industry for Europe's largest economy -- might raise its guidance, traders said.

Evidence of a broader upturn came from China on Wednesday, when the world's third largest economy reported surprisingly strong September trade figures, with imports falling far less steeply than expected.

On Thursday, global stockmarkets reached a 12-month peak and oil set a 2009 high.

TECH BAROMETER

ASML's order book is viewed as a barometer for Intel and other big chipmakers such as Taiwan Semiconductor Manufacturing , the world's largest contract manufacturer.

New orders in the quarter included 18 high-spec immersion machines, which allow manufacturers to produce chips with ever-finer structures.

ASML Chief Financial Officer Peter Wennink said on the company's web site that demand for PCs and mobile phones "was stronger than we anticipated at the beginning of the year" and access to capital for its clients also had improved.

Global chip sales rose for the sixth consecutive month in August and analysts forecast September chip sales will likely increase more than 6 percent from August.

They cited chip orders ahead of the holidays as well as the upcoming release of Microsoft Corp's Windows 7 operating system as sales drivers.

Q4 LOOKING GOOD

ASML Chief Executive Eric Meurice said he expected the order intake in the fourth quarter to be "at least of similar value" to the third and that this would translate into "significant sales growth versus third quarter levels."

"This substantial order increase does not factor in a full worldwide economic recovery, which, if it materializes, could sustain the first half sales level into the second half of 2010," Meurice said.

ASML's third quarter net profit rose to 20 million euros, beating an average forecast of 16 million and compared with a loss of 104 million euros in the previous quarter. Revenue rose to 555 million euros from 277 million euros.

ASML, which competes with Japan's Nikon Corp and Canon Inc, said it expects fourth quarter net sales of around 550 million euros and gross margin of about 37 percent.

For a graphic showing ASML price performance in 2009, click here: http://link.reuters.com/zyf73f