ARM results buck gloomy sector trend

Steve Dinneen
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THE firm behind more than 95 per cent of smartphone chips yesterday reported a surge in profits, bucking the industry trend.

ARM Holdings saw its third quarter sales rise 20 per cent to £120.2m, with profits jumping 44 per cent to £55.8m.

It sold a greater than expected 28 licenses in the quarter, with new low-energy chips in high demand by smartphone makers hoping to improve battery life and drive down costs in their devices.

Its shares closed up 2.5 per cent after fluctuating during the day as investors digested the results. Some analysts were put off by the slower than expected growth in royalty payments – which are accrued for every chip shipped. This was offset by “lumpier” licensing revenue, which takes the form of up-front payments that can stack up during some quarters.

Altogether 1.9bn ARM-based chips were shipped in the three months, with almost half going into devices other than smartphones – traditionally its core market.

The group recently unveiled its new Cortex-A7 processor, which it said will use five times less energy than today’s top-end processors in smartphones from 2013 and keep it ahead of U.S. company Intel in the mobile sector.

Chief executive Warren East told City A.M. there were no nasty surprises for the firm, despite the “macroeconomic uncertainty”.

East said his firm is likely to have taken a small hit from the Thai floods but only in the region of £600,000.

He also told City A.M. the firm could benefit from new “patent box” legislation being discussed that could mean patented inventions, such as its chips, may be taxed at a more attractive rate.