Arm bounds ahead

Chip designer Arm delivered a strong first-half performance, with underlying pre-tax profit having risen 22 per cent year-on-year to £128.5m. New product launches also allowed the company to enter the second half with an impressive order backlog and a growing royalty revenue base – although the hefty share price rating reflects that progress.

Arm increased its market share, too. While microchip shipments on an industry wide basis fell 4 per cent, Arm signed 23 new processor licenses and notched up sales of 2bn chips – a rise of 9 per cent year-on-year. This helped to push licensing revenue up 21 per cent to $132.2m (£85.1m). Processor royalties revenue showed a similar performance with a gain of 10 per cent to $189.2m. Arm has continued to develop its revenue stream from networking systems, with a new architecture license for intelligent network applications, and an announcement by semiconductor group Freescale that it's launching its first Arm processor-based chips for network infrastructure.

Management sounds upbeat about the second half and expects to meet market expectations – broker Peel Hunt forecasts adjusted full-year pre-tax profit of £268.9m and EPS of 14.6p (2011: £229.7m/12.5p).

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