ASML

ASML Holding N.V. (ASML)

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ASML Holding N.V. (ASML)

Morgan Stanley 11th Annual Technology, Media & Telecoms Conference

November 18, 2012 2:05 AM ET

Executives

Franki D'Hoore – Investor Relations

Peter Wennink – Executive Vice President and Chief Financial Officer

Presentation

Franki D'Hoore

Good morning. Thanks for waking up early this morning. I know it’s a little bit difficult this slot on a Friday. Thanks Peter for being with. Maybe we should sum up for you a quick recap of the Q3 with us some actually, but more importantly your view on Q4 and there maybe what you think could happen in 2012 as a generic view of the litho market?

Peter Wennink

Yeah, I think on the Q3 basically, a recap on what we said about a month and a half ago. No major changes. I think it’s more relevant is what I said at the conference a couple of months ago where I was somewhat concerned between let’s say the difference what the customers were telling us and what customers were doing.

And so they gave us a quite a good, an in-depth view of what they needed for 2012. But when we said, where are the orders, then those people held back you could argue that that was Q3 so why would they and then the budgets were not set yet. We were in many instances talking to them with respect to our volume purchase agreements. So, you could also say there was no basis for them to give us the orders now, that gap that is closing.

I mean, currently now few customers indeed doing what they are telling us which is good, as also part of the order guidance that we had in Q3, we said Q4 is going to be a level up as compared to Q3 and we are standing by our guidance. Please.

Franki D'Hoore

Okay, so I think the main question in the room and outside this room is because Q3 was quite low and you are thinking there could be a small uptick in Q4, are we seeing the trough? This is a difficult question.

Peter Wennink

Yeah that’s a very difficult question. You can only say we’ve seen the trough when you look a couple of quarters back and in one quarter it’s very difficult than what we say A level up and that’s what need as we’re going through do double or triple, I mean that’s not the case. So that’s also not the expectation I believe.

No, I think, you have to look back not so much of what –whether there is a order trough or but what our customers doing for 2012, I think in all segments, whether it’s logic or memory, we see customers making their technology transitions very clearly and the major player in every segment, every major player just steps up also on capacity in that leading-edge.

So that is what they’ve told us and that’s what we see them doing, doing in terms of coming to us and also placing orders. And that’s good and that means that, as we said on the conference call a technology transition, the only technology transition really no additional capacity the leading-edge gives us a sales of €750 million per quarter.

So €3 billion, but it’s only technology transitions and on top of that, there are customers that also say well, we don’t probably want to do the absolute necessary, but we want to because of our locker position, spent more to add the capacity at leading-edge, that comes on top and on top of that about €600 million of server sales.

So that gives you an idea of where this would be going and you need to see an order trend that is going to support that and I think we are currently confident that now the way things are going to that’s what I just said is being supported by the, I’d say the order activity of our customers.

Franki D'Hoore

Because really the question is, because last chat I remember, in Q4, you had a very, very big order intake of more than €2 billion, this year about in Q3 500, so maybe six, seven whatever. Maybe you’ll saw a little bit of seasonality in Q4 as well.

Peter Wennink

No I think last year was very particular and peculiar, you could almost say and that was an outlier. Don’t forget in 2009, you had the three quarters of virtually no orders. So people were completely frozen, people meaning our customers, actually all of them were frozen in the sense that, we don’t know what’s going to happen so let’s wait.

They waited and then came to the conclusion that it wasn’t as bad as we all thought. So, they came running back and so at the end of the 2009, it was clear that the year was completely underinvested. We were struggling to keep up with our shipments throughout whole 2010 and at the moment in the time, I think in Q3 of 2010m we were under shifting customer to that demand with about three to four months within a market that is almost exploding in terms of growth, it creates a lot of anxiety at the customers.

So that in Q4, because no matter what happens and we had this going for three years and it was very buoyant. Everybody was banging their heads up, hey I was super bullish and that also shows in the order patterns, they said no matter what happens we are going to put the order out we want to get out place in line. That was really the result of let’s say decimal 2009 no orders and us under in shipping, basically undershipping the market because we cut down on everything on supply chain.

Read the rest of this transcript for free on seekingalpha.com