ARM, Lucent and Pavlov's Dog

High saliva count deal

ARM Holdings' relationship with its investors has much in common with Pavlov and his Dog. The Cambridge-based fabless chip company is the master of the well-timed contract announcement. And it gets investors salivating every time. Yesterday, the company unveiled the first licensing deal for the ARM10 -- with Lucent, no less. No financial details, of course -- but the City still marked up shares 35p to 717.5p. This morning shares have already jumped another 17.5p to 735p. ARM hopes to announce an ARM10 win with a second major company in coming weeks. Note the foretaste, the expectation, the salivation. And watch those shares rise. ARM is now capitalised at £1.3 billion, against £265 million when it floated 14 months ago. This is Internet stock rating territory - the chip design house is valued at more than 100 times pre-tax profits. es rise. Lucent will embed the ARM10 processor core into its portfolio of system on a chip products. These are what ARM calls power communications applications and include -- take a deep breath here -- "cordless and digital cellularphones, personal digital assistants, high-speed computer input/output,enterprise data networks, wireless system infrastructure and broadband wide-area network infrastructure". ARM says it will ship ARM10 evaluation boards in Q4. ®

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