ASMI profit dragged down by weak chip packaging business

AMSTERDAM (Reuters) - Dutch chip equipment maker ASM International reported a 94 percent fall in profit for the third quarter, weighed down by a 79 percent fall in operating profit.

ASMI, which makes equipment used for processing, assembly and packaging of semiconductors, said weak economy weighed on both its chip processing and packaging businesses.

"While sales, both in Front-end and Back-end showed, despite worsening market conditions, a healthy growth, our results were lagging behind," Chief Executive Officer Chuck del Prado said in a statement.

The company's front-end business involves processing, or production, of silicon chips, and the back-end, held by Hong-Kong listed ASM Pacific Technology , specializes in dicing and packaging of microchips.

ASMI reported a third-quarter net profit of 4.9 million euros, down from 17.7 million euros in the second quarter, and 81 million euros last year. Analysts polled by Reuters were expecting 25.6 million euros.

ASMI's group sales for the quarter were up 9 percent to 409.3 million euros, boosted by a 15 percent rise in revenue at the firm's back-end business, which makes the bulk of its sales. Sales at the front end fell by 8 percent from the prior year.

The firm's order book or orders booked but not yet paid -- the best indication of future earnings -- fell 33 percent to 295.2 million euros sequentially. Analysts had expected third-quarter order book of 371 million euros.

After years of battles with shareholders, ASMI's founder and largest shareholder, Arthur del Prado, who is Chuck del Prado's father, told investors at a shareholder meeting in May he is in favor of splitting up the company to create more value.

The firm made no mention of this major change in direction on Thursday in its earnings statement, nor did it mention the study currently being conducted into the market's valuation of ASMI.

ASMI competes with Novellus Systems Inc and Applied Materials .

(Reporting by Roberta B. Cowan & Aurindom Mukherjee in Bangalore; Editing by Saumyadeb Chakrabarty)

Source: http://news.yahoo.com/asmi-profit-dragged-down-weak-chip-packaging-business-230020379--finance.html

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