By Razak Musa Baba and Rory Gallivan
Chip designer ARM Holdings PLC on Tuesday beat first-quarter
expectations amid strong demand for its smartphone and tablet
technology and said it expects 2015 revenue in dollar terms to meet
expectations.
ARM, whose technology can be found in the vast majority of the
world's smartphones including those made by Apple Inc., recorded
net profit of GBP85 million ($126.7 million) for the three months
to March 31, compared with GBP62.3 million a year earlier. Revenue
rose 22% to GBP227.5 million, beating analysts' projection of
GBP224.1 million.
Shares in ARM, which makes money by licensing its designs to
chip makers, then collecting royalty revenue when the chips ship,
were up by more than 5% Tuesday morning, before edging back
slightly.
Processor-royalty revenue in dollar terms, a much-watched
figure, rose 31% on the year, the company said, adding that it has
signed 30 processor licenses for a broad range of applications.
"As the world becomes more digital and more connected, we
continue to see an increase in the demand for ARM's smart and
energy-efficient technology, which is driving both our licensing
and royalty revenues," said Chief Executive Simon Segars.
Processor-licensing revenue was down 2% in the quarter, which
was in line with expectations following strong growth previously,
said Chief Financial Officer Tim Score during a call with
journalists, adding that the company expects to grow licensing
revenue by between 5% and 10% in the longer term, in line with
historic levels.
ARM didn't give a figure for full-year revenue expectations, but
analysts expect ARM to report revenue of around GBP970 million for
2015, up from GBP795.2 million the previous year.
Mr. Segar reported strong demand for the company's ARMv8-A
processor technology, which enables smartphones and other devices
to perform complex functions without using too much power, and for
graphics and video technology.
Aside from smartphones and tablets, ARM said it is also seeing
demand for its processors to be used for servers and networking and
for the " Internet of Things", a term used for the growing tendency
for more items to be wirelessly connected.
ARM last year launched a unit devoted to the market for
connected-devices and last week acquired two companies, Sunrise
Micro Devices Inc., and Wicentric Inc., to help push its drive into
the Internet of Things, and ultimately lift revenue stream. Mr.
Segar said in a call with analysts Tuesday that Sunrise Micro's
technology will help to increase ARM's capability in the growing
area of wearable devices.
Growing use of wireless technology in devices other than
smartphones and tablets has in recent years reduced ARM's
dependence on the mobile market. Shipments of mobile devices
accounted for 46% of ARM's royalty units in the latest quarter,
down from 65% over 2008.
Write to Rory Gallivan at rory.gallivan@wsj.com
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