Rising sales during the last three months of ARM's financial year failed to lift the chip designer's full-year figures, the company reported yesterday.

While Q4 2003 yielded revenues totalling £34 million ($62 million), up seven per cent from Q3's £31.7 million, the year as a whole generated revenues of £128.1 million ($230 million), down 15 per cent on 2002's £150.9 million ($274 million).

Profit before taxation fell year on year from £45.4 million ($82 million) to £28.4 million ($51 million).

ARM was hit hard during the year by currency fluctuations - 90 per cent of its 2003 income was paid in US dollars. The average exchange rate during 2003 was £1:$1.64, compared to £1:$1.50 in 2002. Rates peaked to &pound:1:$1.71 in Q4.

Fourth-quarter royalty revenues reached £12.8 million ($62 million), up from £11 million ($20 million) the previous quarter. Unit shipments rose 20 per cent sequentially to hit a record 236 million units. Five new licensees commenced shipping in the quarter bringing the total to 60, ARM said.

During Q4, ARM's operating margin increased to 22.3 per cent from 17.7 per cent in Q3. Profit before taxation totaled £8.9 million, up from £6.8 million in Q3 2003.

Warren East, ARM's CEO, said: "After resetting our cost base at the start of Q4 2002, 2003 has been a year of operational stability and gradually improving financial performance. Our decision to maintain high levels of research and development expenditure during the protracted industry downturn has enabled us to introduce a number of new products in the year based on the innovative technologies we have developed. These are already driving licence revenue and underpin our confidence for revenue growth during 2004." ®

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