Chip maker ARM’s Q3 sales, profits up; partners shipping over 600m units
Leading chip designer ARM Holdings plc (ARM.L) said today that Q3 sales were up 14% at £64.8m and pre-tax profit grew 11% to £21.2m from a year previously.
CEO Warren East (pictured) said: “We continue to execute well on licensing across the business with three more Cortex family licenses and three more 65nm physical IP licenses being signed in the quarter.
“Additionally early in Q4, the Physical IP division completed the licensing of leading-edge 45nm technology to IBM, Samsung and Chartered, representing a further significant milestone towards our longer term goal of licensing our Physical IP products on the most advanced processes to the wider semiconductor industry.
“With licensing and royalties performing well, we are confident of achieving a solid Q4 in line with current market expectations."
But some might have been hoping for a bit more. ARM’s share price fell 2% in early trading to 106.75p. With a market capitalisation of around £1.45 billion, it remains the Cambridge Cluster’s largest listed company by quite a margin.
Perhaps one or two were spooked by the news that ARM’s order backlog was lower at the end of 30th September than at the half year. The company said this was due partly to higher conversion of Physical Intellectual Property Division backlog into revenue in the third quarter.
However, Mr East said “we enter Q4 with a healthy opportunity pipeline for licensing across the portfolio. With licensing and royalties performing well, we are confident of achieving a solid Q4 in line with current market expectations.”
R&D up
The Cambridge-headquartered firm said that its research and development spending reached £15.5m in Q3, representing 24% of revenues, compared to £15.0m in Q2 2006 and £13.9m in Q3 2005.
In Q3 ARM bought 18.5 million of its own shares at a cost of £21.5m. Over the past six months, ARM has returned over £43m to shareholders via its share buyback program, representing 65% of the total returned to shareholders via this program since its inception in July 2005.
ARM partners shipped 621 million units in Q2 2006 (it reports royalties one quarter in arrears), up 53% on the comparable period last year and up 12% sequentially. This big jump in volumes was driven mainly by products incorporating lower-priced chips, including ultra low-cost handsets, connectivity semiconductors such as Bluetooth and WiFi, smartcards and microcontrollers.
As a result, the 26% year-on-year growth in dollar royalty revenues was achieved with an average royalty rate of 6.5 cents a unit compared to 7.2 cents a unit last quarter.
31st October 2006
