ASML Adds $1.1 Billion for Stock Buybacks as Sales Wane

  • Company forecasts first-quarter revenue trailing estimates
  • Demand for equipment cooling as chipmakers curb spending

ASML Holding NV plans to buy back an additional 1 billion euros ($1.1 billion) of its stock, seeking to reward investors after shares of Europe’s largest semiconductor-equipment maker dropped more than 10 percent so far this year.

The repurchases will be made in 2016 and 2017 and add to 500 million euros remaining from a previously announced buyback program, the company said Wednesday in a statement. It plans to raise its full-year dividend by 50 percent to 1.05 euros a share.

ASML predicted first-quarter revenue trailing analysts’ estimates as customers are more cautious in ramping up capacity and investing in extreme ultraviolet lithography systems, which produce smaller chips faster. Intel Corp., one of the company’s most important customers, said last week it will invest about $9.5 billion in new equipment this year, which is about $500 million lower than its previous spending estimate.

“The first-quarter outlook disappoints,” Edwin de Jong, analyst for SNS Securities, said by phone. “It is good that you return cash to shareholders, but you need to improve operationally.”

Shares of ASML advanced 2 percent to 75.26 euros at 9:08 a.m. in Amsterdam. They had lost 11 percent this year through Tuesday, compared with a 7.7 percent drop by the benchmark AEX index in Amsterdam.

First-quarter revenue will drop to about 1.3 billion euros, Veldhoven, Netherlands-based ASML predicted. Analysts had estimated 1.38 billion euros on average. A year earlier, ASML reported sales of 1.65 billion euros.

“The first-quarter guidance of 1.3 billion euros is the result of timing of customer requirements and a mix issue,” Chief Executive Officer Peter Wenninksaid in a video on the company’s website.

Capital spending in the lithography segment, where ASML is active, is forecast to grow by 1.4 percent in 2016, researcher Gartner Inc. said last week. Gartner predicts a drop of 4.7 percent in total worldwide semiconductor capital spending.

Second-quarter sales will rise “significantly” from the first quarter as customers in the logic segment are expected to start upgrading equipment, Wennink said in the statement.

Before it's here, it's on the Bloomberg Terminal.