ASML Sales Profit Hit Record

2nd UPDATE:ASML Sales, Profit Hit Record, Plans Share Buyback

VELDHOVEN, The Netherlands (Dow Jones)--ASML Holding NV (ASML.AE) Wednesday ushered in the European technology earnings season with record results that beat market expectations, and said it plans to double its dividend and launch a share buyback.

ASML, the world's largest maker of lithography systems that map out electronic circuits on silicon wafers, said net profit for the quarter ended Dec. 31 rose sharply to EUR407 million from EUR50 million a year earlier, while sales rose to EUR1.52 billion from EUR581 million.

The Veldhoven, Netherlands-based company booked orders valued at EUR2.32 billion in the period, bringing its order backlog to an all-time high of EUR3.86 billion. ASML changed its definition of new orders to include some services sold with its systems. Under the previous definition, fourth-quarter bookings would be EUR2.01 billion, still an all-time high.

For the current first quarter, ASML expects sales of around EUR1.4 billion and a gross margin of between 44% and 45%. As a result, the company said it intends to double its dividend payout to EUR0.40 a share and to buy back shares for a value up to EUR1 billion over two years.

ASML's performance builds on the recent strong performance of the broader technology segment. Late Tuesday, Apple Inc. (AAPL) said its fiscal first-quarter profit surged 78% on the success of its iPhone and Mac computers. Earlier this month chip giant Intel Corp. (INTC), one of ASML's most important customers, said it continued to benefit from strong demand from corporate customers and expects 2011 revenue to rise about 10% on year amid strong growth in server demand and from emerging markets.

"The fourth quarter was a strong close to a remarkable year in the history of ASML during which we achieved record sales, profit and bookings," said ASML's Chief Executive Eric Meurice.

"This record-breaking backlog and the additional expected first quarter bookings in 2011 confirm a potential for more than EUR5 billion of net sales in 2011," he said.

ASML is benefiting from customers moving to new, more efficient technology and the addition of capacity. Demand for DRAM memory cards, found in desktop computers, cellphones and games consoles like Sony Corp's (6758.TO) Playstation and Microsoft Corp's (MSFT) xBox, was less weak than it had expected. Meanwhile, customers invested in NAND flash memory chips which are found in smartphones such as Apple's (AAPL) iPhone, the iPad and increasingly in laptop computers.

ASML's strong results weren't a surprise after it already raised expectations for fourth-quarter bookings in December, said Victor Bareno of SNS Securities. Bareno has a hold rating on the share with an EUR31 target price.

ASML's shares opened Wednesday 0.7% higher but by 0944 GMT were down 2.3% at EUR29.27, underperforming a 0.1% fall in the broader Amsterdam market.