ASML to post loss

July 5, 2001 Posted: 2120 GMT

LONDON (CNN) -- ASML, one of the world's biggest chip equipment makers, warned on Thursday it will post a loss as customers cancel orders.

The Dutch company joins a legion of semiconductor and telecom equipment makers issuing profit warnings as a U.S. economic slowdown spreads to Asia and Europe.

Based in Veldhoven, The Netherlands, ASML said its expects to report a net loss of between 95 million ($72 million) and 105 million for the six months to June 30.

ASML expects its European operations to "at least break-even" for the first half of the year, before one-time merger and acquisition costs for Silicon Valley Group of the U.S., which it bought for $1.2 billion.

Before the acquisition, Silicon Valley – now called ASML USA – said revenues for the quarter ending June 20 would decline by as much as 40 percent quarter-on-quarter.

ASML now concedes its U.S. business will post a second-quarter net loss as revenue declines more than 40 percent.

The company is the world leader in technology that allows semiconductor manufactures to photographically imprint complex circuitry patterns on silicon wafers to create microchips.

"Over the past month, ASML's customers have indicated that their need for further capacity additions in 2001 has diminished on the back of continued weakening of semiconductor demand," ASML said.

ASML went on to warn "market recovery in Q4 (fourth quarter) is more and more unlikely."

"They were too optimistic and their clients were too optimistic. The idea of a turnaround in the fourth quarter was more about hope than reality," ING Barings analyst Eric de Graaf told Reuters.

The company said it would implement a programme to reduce costs and save cash, which would lead to job cuts – although the company would not comment further.

Shares in ASML dropped 9.3 percent to 23.18 in Amsterdam morning trading. The stock has fallen 21 percent to 25.55 on Wednesday from a peak on January 24 of 32.32.

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