Feeds

Chips are up at ARM Holdings

Recovery at last

  • alert
  • submit to reddit

RISC chip designer ARM Holdings is finally benefiting from the recovery in the chip sector, producing Q4 revenue at the top end of forecasts. Figures for the year as a whole were weak, and currency problems may continue in 2004, but the company's dominant position in the mobile phone sector looks unlikely to be challenged.

ARM Holdings is now comfortable with market predictions that sales will grow in dollar terms at between 20% and 25% in 2004. After struggling for much of last year, ARM came good in the final quarter to December 31 with net income up 65.7% at GBP5.9 million on revenue up 5.4% at GBP33.9 million. The year as a whole was still a disappointment with net income down 38.6% at GBP19.4 million on revenue 15.1% lower at GBP128.1 million.

The figures exaggerate the company's downturn. With 90% of revenue denominated in dollars, it has suffered from the currency's decline and this will continue to be a problem if it continues in 2004.

The company's confidence in a recovery was confirmed by a decision to resume paying dividends. Chief executive Warren East argued that its decision to maintain high levels of R&D during a prolonged industry downturn enabled it to introduce new products that were already driving license revenue and underpinned its confidence on revenue growth in 2004.

The industry downturn hit licensing revenue, which fell 38.8% last year to GBP50.8 million while royalty revenue increased 61.3% to GBP44.4 million. By the fourth quarter however licensing revenue of GBP12.9 million was only 1.5% below the level a year earlier.

With its processors powering about 70% of mobile phones, ARM is sure to profit from the recovery of the sector. Last year 782 million devices were using its cores and it received royalties of $0.91 on each device, a figure so small that it would be hardly worthwhile anyone trying to challenge its dominance in this space.

Source: ComputerWire/Datamonitor

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.