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).
| 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) |
|---|---|---|---|---|
| 2011 | 234 | 64.2 | 3.60 | 1.39 |
| 2012 | 268 | 106 | 5.60 | 1.67 |
| % change | +15 | +65 | +56 | +20 |
Ex-div: 5 Sep Payment: 4 Oct *Includes intangible assets of £552m, or 40p a share | ||||
