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ASML Stock Took Hit Early veldhoven, netherlands -- On a day when the stock market would liquefy an entire year's worth of gains, ASM Lithography (ASML) took a mysterious spill the morning before the market tumble. Lacking any announcement or disclosure as provocation, ASML shares lost $5.75 in value by 12 noon Monday, Aug. 31, before closing at $17.625, down $4.625 for the day. The falloff elicited several theories. One theory centered on an Italian investor with significant stock holdings who began selling shares, indiscriminate of the price resulting from the swift dip in value. Jan Hoefnagels, ASML director of investor relations, agreed that this could be a factor; however, he said it was probably "a combination of factors." According to Mr. Hoefnagels, Nikon Corp.'s disclosure, earlier in the day, that it would take a loss due to poor sales at its stepper subsidiary could have been a factor in the falloff. Nikon, the top supplier of wafer steppers, said it would ship 300 units for the 1998-1999 fiscal year, 30 percent below the previous year. The prevailing wisdom, in light of this disclosure, could have been if Nikon's lithography equipment business is going down, ASML will follow suit. Mr. Hoefnagels disagrees with such thinking. He points out that Nikon and ASML practice different business models. Nikon, he says, is a vertically-integrated company that makes all components of its steppers. Meanwhile, ASML, follows an outsourcing strategy based on a modular design in which ASML is doing final assembly. This "flexible business model" allows ASML to have a far lower breakeven point. Mr. Hoefnagels estimated ASML's breakeven point at 110-120 steppers. In contrast, he estimated that Nikon's breakeven point was 370-400 systems. "We think we have less problems than Nikon may have," says Mr. Hoefnagels. "We feel we are still gaining market share." Nikon's statement further dims the market perception that the stepper makers would be immune to the industry downturn. In the initial phases of the downturn, the leading stepper makers as well as photomask suppliers and some subsystems companies were perceived to have immunity due to the critical nature of their technologies. Recent statements by Nikon, ASML, Photronics, Du Pont Photomasks and others revising expectations have rescinded this perception. A third possibility for ASML's share price falloff could be the "sell" rating placed on ASML stock by a Dutch market research firm, Van Ernst Jakobs Research. The rating was released Monday evening in Amsterdam, before the Nasdaq National Market opened in the U.S. While the Dutch firm maintains that ASML is a long-term attractive company, it placed a short-term sell rating on the company due to a belief that ASML may announce a special charge related to more recent downturns in the semiconductor business. "That's news to me," says Mr. Hoefnagels of the special charge. He says that ASML has given no guidance to support such an assessment. Mr. Hoefnagels speculated that investor activity related to ASML could be part of a larger trend in which investment decisions are based on intrinsic value over price to earnings ratio. |