ARM Q2 beats forecast on strong chip demand; good outlook ahead

ARM Q2 beats forecast on strong chip demand; good outlook ahead

Summary: British chip designer ARM continues to exceed expectations despite a clammy economic outlook and competition in the face of larger chip makers.

TOPICS: ARM, Tech Industry

British chip designer ARM said today it reported a rise in second-quarter profits -- higher than it expected -- thanks to a sudden rush for ARM-powered smartphones and tablets. 

ARM said it generated £66.5 million ($103m) in profit on revenue of £135.5 million ($210m), or 3.58 pence (5.5 cents) per share (statement), beating all analyst forecasts. 

The company's net profit rose by 48 percent to £39.4 million ($61m) for the quarter ending June 30, from £26.6 million ($41.17m) a year earlier. Analysts thought ARM would expect lower growth due to tougher macro-economic conditions. 

Revenue wise, ARM said it saw a 15 percent rise in quarterly revenue to £135.5 million ($209m) from £117.8 ($182m). The market expected £129.8 million ($201m) knocking a strong albeit single-digit push beyond expectations.

The firm declared an interim dividend of 1.6 pence per share (2.5 cent), up from 20 percent a year earlier. 

ARM chief executive officer Warren East said in a prepared statement:

ARM's royalty revenues continued to outperform the overall semiconductor industry as our customers gained market share within existing markets and launched products which are taking ARM technology into new markets. This quarter we have seen multiple market leaders announce exciting new products including computers and servers from Dell and Microsoft, and embedded applications from Freescale and Toshiba.

On the whole, ARM is looking strong in the face of other, larger chipmakers. Intel recently hedged its upcoming quarter and AMD reduced its forecasts. Despite the company's small size, with just over 2,250 employees, it continues to grow and add staff to its burgeoning roster.

But the company's outlook noted the continued deteriorating global macro-economic situation and warned consumer and enterprise spending could suffer in the second-half of the year. Crucially, in the face of Windows 8 on ARM tablets -- or Windows RT devices -- that are expected to debut later this year, ARM notes that for buyers, there may simply not be as much money to splash around.

The chip designer said its annual revenue looks as though it will fall in line with market expectations.

ARM shares closed 2.7 percent lower Tuesday at 485 pence, marking the company's market cap at £6.68 billion ($10.34bn), but rocketed at market open on the London Stock Exchange. Shares were up by close to 4 percent, breaking through the 500 pence mark.

Topics: ARM, Tech Industry

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  • fsgedf
  • Interesting...

    ... so ARM expects to continue to do well overall, but doesn't expect Windows RT (or Windows Phone, for that matter) to contribute to that?

    Not something Microsoft wants to hear...
    • Not much is incremental

      For ARM's purposes, it doesn't matter who sells the phone. Windows Phone, Android phone, iPhone... they don't care, forecast doesn't change. It only changes if people who currently have no phone suddenly enter the market because now there are Windows phones. There isn't going to be much of that.

      The RT tablets are a forecasting puzzle. RT tablets that take sales away from iPad or Android don't change ARM's forecast: they were going to sell an ARM chip no matter what. The mystery is how many RT tablets will be sold where the alternative was an Intel-based laptop or Ultrabook. Those represent incremental business for ARM. I don't think abybody knows how to forecast that.
      Robert Hahn
  • Since when is 1$ worth more than 1£?

    £6.68 billion ($4.3bn) ... £26.6 million ($17.15m) ..., Zack, check your figures!
    • You won't believe this...

      Currency converter was set to USD --> GBP, my default setting. Should be corrected now, apologies!
  • By The Way ...

    ... the company expects a total of 8 billion ARM chips to ship this year. That's about 20 times the number of CPUs Intel will ship, and it's more than the number of people on the planet.