ARM expects flat revenue to continue

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ComputerWire: IT Industry Intelligence

RISC chip designer ARM Holdings Plc expects revenue to stay flat "for the foreseeable future" and has warned that the closure of licensing deals remains unpredictable. However, the Cambridge, UK-based company believes that as 2003 progresses, momentum will be provided by the licensing of its newer cores, and the introduction of new platform products.

In the fourth quarter to December 31, net income was 3.3m pounds ($5.4m), down from income of 9.3m pounds ($15.3m), on revenue down 19.7% at 32.3m pounds ($52.9m). For the year, net income fell 3.2% to 30.8m pounds ($50.6m) on revenue up 3.2% at 150.9m pounds ($247.5m).

ARM fell from grace in October 2002 when after meeting profit forecasts for the previous 13 quarters, it was forced to issue a profit warning and admit that the chip industry downturn had finally caught up with the company. It was forced to cut its headcount by 12% to save 5m pounds ($8.2m) a year.

Nevertheless, while other processor designers such as MIPS Technologies Inc are mired in losses, ARM continues to make money despite the recent slide in revenue. While licensing revenue slowed in the second half, revenue for the year was up 8% at 83m pounds ($136.1m) with 70 licenses signed in the year, compared to 77 in the previous 12 months.

Rankled by criticism that it is approaching market saturation, ARM pointed out that two-thirds of the top 150 semiconductor companies have yet to become ARM licensees. The company acknowledged that many of the 100 that have yet to succumb to its advances concentrate on 8-bit processors, but it believes that in the long term, the market is moving in its direction.

Equally, it is hoping to persuade existing customers to move up the value chain. While only 7% license ARM9, they provide 20% of revenue. While ARM can see no attractions in moving to 64-bit processors, it has introduced 64-bit addressing in its latest ARM10, in a further temptation to upgrade.

Though royalty revenue for the year was down 3.9% at 26.8m pounds ($43.9m) in the year, it did show 26% sequential growth in the fourth quarter to 7.8m pounds ($12.7m). Given that there were 127 million units shipped in this period, this puts the royalty per unit at around $0.10, one of the reasons for ARM’s past success.

© ComputerWire
ARM Expects Flat Revenue to Continue

RISC chip designer ARM Holdings Plc expects revenue to stay flat "for the foreseeable future" and has warned that the closure of licensing deals remains unpredictable. However, the Cambridge, UK-based company believes that as 2003 progresses, momentum will be provided by the licensing of its newer cores, and the introduction of new platform products.

In the fourth quarter to December 31, net income was 3.3m pounds ($5.4m), down from income of 9.3m pounds ($15.3m), on revenue down 19.7% at 32.3m pounds ($52.9m). For the year, net income fell 3.2% to 30.8m pounds ($50.6m) on revenue up 3.2% at 150.9m pounds ($247.5m).

ARM fell from grace in October 2002 when after meeting profit forecasts for the previous 13 quarters, it was forced to issue a profit warning and admit that the chip industry downturn had finally caught up with the company. It was forced to cut its headcount by 12% to save 5m pounds ($8.2m) a year.

Nevertheless, while other processor designers such as MIPS Technologies Inc are mired in losses, ARM continues to make money despite the recent slide in revenue. While licensing revenue slowed in the second half, revenue for the year was up 8% at 83m pounds ($136.1m) with 70 licenses signed in the year, compared to 77 in the previous 12 months.

Rankled by criticism that it is approaching market saturation, ARM pointed out that two-thirds of the top 150 semiconductor companies have yet to become ARM licensees. The company acknowledged that many of the 100 that have yet to succumb to its advances concentrate on 8-bit processors, but it believes that in the long term, the market is moving in its direction.

Equally, it is hoping to persuade existing customers to move up the value chain. While only 7% license ARM9, they provide 20% of revenue. While ARM can see no attractions in moving to 64-bit processors, it has introduced 64-bit addressing in its latest ARM10, in a further temptation to upgrade.

Though royalty revenue for the year was down 3.9% at 26.8m pounds ($43.9m) in the year, it did show 26% sequential growth in the fourth quarter to 7.8m pounds ($12.7m). Given that there were 127 million units shipped in this period, this puts the royalty per unit at around $0.10, one of the reasons for ARM’s past success.

© ComputerWire

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