ARM reports small growth in 1H08 revenue, slip in pretax profit in tough market conditions; market warms to outlook
Low cost chip designers ARM Holdings has reported a 2% rise in first half 2008 revenue to £132.9m and a 4% slide in pre-tax income to £42.5m compared with 1H07.
CEO Warren East said the Cambridge-based Group had made "good progress" in "challenging market conditions, further extending its backlog which was already at record levels.
"We see continued strong demand for ARM's technology including long-term commitments for our processor and physical IP technology by industry leaders."
The stock market seemed to agree, marking up the iconic Silicon Fen company's share price by almost 4%. ARM remains the region's second largest listed entity with a market capitalisation of about £1.26 billion.
Mr East said: "We enter the second half of 2008 with a broad product portfolio for licensing into an increasingly diverse customer base; an opportunity pipeline expected to deliver near-term license revenue and good royalty momentum across the business.
"We therefore reiterate the guidance for FY 2008 given in both February and April; assuming no further deterioration in the trading environment, we continue to expect to increase dollar revenues in FY 2008 by at least the growth rate achieved in FY 2007."
As in prior years, ARM's Q4 revenues are expected to be stronger than Q3 due to seasonal impacts on development systems revenues in 3Q and the typical strength of license and royalty revenues in the fourth quarter.
"Prospects for PD licensing in H2 2008 are promising notwithstanding the uncertain current trading environment," Mr East said. "We have a broad product portfolio that our customers are designing into applications from mobile computers to microcontrollers. We are encouraged by our second successive quarter of sequential growth in PIPD as we build momentum in that business.
"Growth of more than 25% year-on-year in underlying royalty revenues for both PD and PIPD provides further evidence of the increasing use of ARM's technology in a rapidly broadening range of consumer electronics products."
ARM said that at the end of June it had 1,695 full-time employees, 33 fewer that at the end of 2007, following restructuring of some activities.
It said during the 1H Tudor Brown had become President of ARM and Mike Inglis had become EVP and General Manager of the Processor Division. Both continue as members of the ARM Holdings Board. Graham Budd, who was previously EVP and General Manager of the Processor Division, had become Chief Operating Officer and continued as a member of the Executive Committee.
