Typically strong third quarter figures from chip designer ARM got a very untypical response. The shares fell six per cent to 366p, despite the company unveiling normalised pre-tax profits up 60 per cent on a one-third jump in revenue, to just over £100m.
IC TIP:
Sell
at
366p
ARM is a great business, and there's no denying we got it wrong in our most recent recommendation (), but its growth potential cannot justify a 2011 PE ratio of 40. Immediate worries hang on consumer spending and the impact a decline could have on ARM's royalty income, which earns a cut on units sold. And persistent takeover speculation (Apple, Intel among others) continues to add froth to the shares.
When: 06/05/10
Price: 257p
Performance to date: -42%
