ARM 1Q’07 pre-tax profit slips on soft semiconductor market; share gains on strong order book
ARM Holdings plc (ARM.L) today said income before income tax in the quarter ended 31 March was £12.7m compared to £16.1m in Q1 2006.
The profit slip was despite the fact that total dollar revenues reached $129.2m, up 14%. Sterling revenues of £66.5 million were up 3% year-on-year after an 11% weakening of the dollar against sterling.
CEO Warren East (pictured) said: the "Q1 results represent another quarter of robust operational execution and strong cash flow generation against a backdrop of some softness in the semiconductor industry.
“In addition, today's announcement of our intention to double the dividend in 2007 and to accelerate the share buyback program reflects our confidence in the long-term growth, earnings and cash generation potential of the business."
Share price gains
ARM, the largest listed in the Cambridge Cluster of high tech companies, saw its share price rise 6.25p to 137.75p on this morning’s news. It now has a market capitalisation of around £1.84 billion.
The company said it was encouraged to have started 2007 by reporting a 14% increase in our Q1 dollar revenues compared to last year.
“We enter the second quarter with a strong order backlog and a healthy licensing sales opportunity pipeline across the business,” Mr East said. “With our reported royalty revenues in Q2 being based on foundry utilisation and product shipments made in the first calendar quarter, when some softness in the wider semiconductor industry persisted, we expect total group dollar revenues in Q2 to be at similar levels to Q1.
“Based on our broad product portfolio for licensing and the increasing usage of ARM technology across a wide range of end markets, we are well-placed to benefit from the generally-anticipated improvement in industry conditions later in the year and therefore we remain confident of achieving dollar revenues in the second half broadly in line with expectations.”
26th April 2007
