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).
|ARM HOLDINGS (ARM)|
|ORD PRICE:||514p||MARKET VALUE:||£7.08bn|
|TOUCH:||513-514p||12-MONTH HIGH:||648p||LOW: 443p|
|DIVIDEND YIELD:||0.7%||PE RATIO:||49|
|NET ASSET VALUE:||82p*||NET CASH:||£496m|
|Half-year to 30 Jun||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 5 Sep
Payment: 4 Oct
*Includes intangible assets of £552m, or 40p a share
Arm is making impressive progress with developing new revenue streams and winning market share in existing areas. However, there's scope to be cautious about future shipment levels given growing economic headwinds and the shares, trading on a mighty 35 times forecast earnings, look well up with events. Hold.
Last IC view: Hold, 629p, 3 February 2012