(Rcasts with rebound in share price, analyst, trader comments)
By Stratos Karakasidis
Oct 25 (Reuters) - Shares in BE Semiconductor Industries (Besi) jumped over 6 percent on Thursday, reversing earlier losses as resilience in the company’s profit margins offset investor concern over its sales outlook.
Besi shares had fallen 8 percent in early trade after it said it expects fourth-quarter sales to drop up to 25 percent compared with the previous quarter, in the face of a potential slowdown in the semiconductor market.
President and Chief Executive Richard Blickman said in a statement that it was unclear whether the present environment reflects simply a temporary pause after the large capacity build in 2017, or a more traditional downturn.
The company, which supplies chipmakers with semiconductor assembly equipment, reported a drop of 27.6 percent in third-quarter revenue compared to the second quarter, partially due to a fall in die bonding shipments for mobile applications.
However, its third quarter gross margin of 58.0 percent was higher than the second quarter figure of 56.5 percent, mainly due to a more favorable product mix, the company said.
ING analysts said the fourth quarter guidance was much weaker than expected but profitability was holding up better than expected.
“BESI reported a solid gross margin and took aggressive cost measures which we find both impressive but also show that the company wants to be positioned in case the downturn is prolonged,” they said in a note.
A Paris-based trader also pointed to resilience in the margin as helping the stock, adding that free cash flow was good because Besi had improved its cost structure in recent years.
Shares in other companies in the sector were also trading higher, with ASML up 2.5 percent and ASM International up 1.6 percent.
Fears of falling demand in the semiconductor sector had dragged down chipmakers’ shares over the past few months.
Franco-Italian company STMicroelectronics, a supplier for Apple and Tesla, warned on Wednesday of slowing demand in China.
The Dutch manufacturer said revenue for July-September was 116.7 million euros ($133.12 million) and orders dropped by 33 percent compared with the same period of 2017 due to lower demand for mobile and high performance computing applications.
$1 = 0.8767 euros Reporting by Stratos Karakasidis in Gdynia, additional reporting by Alan Charlish, Editing by Sherry Jacob-Phillips and Emelia Sithole-Matarise