Strong ARM bucks tech trend

By THIS IS MONEY
Updated:

 

CHIP designer ARM Holdings continued to defy the gloom in the tech sector as it said demand for its products remained strong. Pre-tax profits in the third quarter beat analysts' forecasts, rising 46% to £12.9m in the three months to 30 September.

The Cambridge-based firm, which licenses its products but does not make them, said revenues were also up 42% at £37.6m.

ARM added that it felt well placed to make a strong start to next year, with a high level of forward orders already booked in.

Robin Saxby, who is moving from chief executive to executive chairman, said: 'The business continues to deliver strong performance and we continue to experience high demand for our products and services.'

Much of ARM's growth has come from demand for licences to its technology, with revenues in that area more than double the same quarter last year. Licence revenues in the period amounted to £21.8m and now represent 58% of the business compared with 51% in the previous three months.

ARM also derives royalty fees from the sale of every unit that contains one of its chips, but revenues from this division were down on a year earlier. Royalties were £6.4m in the third quarter, accounting for 17% of all revenues compared to the 28% recorded in the same period last year. Total unit shipments still increased to 103m units against 98m in the previous quarter following strong demand for its chips in printers, digital cameras and handheld games.

The latest figures bring ARM's revenues for the nine months to 30 September to £106.1m, an increase of 50% on last time. Profit before tax was 44% ahead at £36.5m.

Chief financial officer Jonathan Brooks said there was no reason to believe the improvements would not continue. He added: 'Given our high level of forward orders we remain confident about the outlook for our business for the remainder of the year. We also feel well placed to make a strong start in 2002.'

Despite consistently reporting quarterly figures above City expectations, ARM has not been able to escape the pressure on tech stocks. Shares closed on Friday night at 299p after peaking at £10.01 last year.

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