ARM Posts Earning Surprise, Fueled by 23 New Licensees
July 25, 2012 2:04 PM
No matter who wins the smartphone war, ARM is the (almost) guaranteed victor
Intel Corp. (
) is looming on the horizon, threatening the domination of
-based ARM Holdings plc. (
) in the smartphone and tablets market. Intel's early performance has been
better than expected
, but hasn’t resulted in many design wins. That could soon change, though, when Intel's ultra-mobile Atom system-on-a-chips (SOCs)
shrink next year
to the 22 nm node.
But for now, ARM remains king of things mobile and embedded.
I. ARM Continues to Beat Cautious Analyst Expectations
The British chipmaker
its Q2 earnings today, and it showed very healthy performance. Despite a
smartphone sales miss
from Apple, Inc. (
) a key instruction set licensee -- ARM continued to demonstrate that it did not rely on any single licensee, but rather its
dominance of the entire market
Weak iPhone sales did not hurt ARM's earnings. [Image Source: PocketLint]
ARM posted a pre-tax profit of £66.5M ($104.5M USD) on revenue of £135.5M ($213.0 M USD). That works out to earnings of 3.58 pence/share, or about 5.63 cents/share. A poll of analysts by
The Financial Times
reported a consensus expectation of 3.19 pence per share on revenue of £138.5M.
The actual results are interesting, as they mean that ARM made 12.2 percent more profit than expected, despite making 2.2 percent
revenue that expected.
This is the fourth straight quarter for ARM beating analyst expectations. The company is today one of the largest powers in the chipmaking world, just over
two decades after its 1990 spinoff
from Apple and the now-defunct UK computer-maker Acorn Computer.
II. New Partners Added to ARM's Stable
The profit surprise was driven by strong sales of 2.0 billion licensed chips for the quarter and the addition of 23 new licensees. Among those licensees was Advanced Micro Devices, Inc. (
), who is pairing with ARM
on several efforts
ARM Holdings CEO Warren East summed up some of his firm's other highlights, stating, "ARM's royalty revenues continued to outperform the overall semiconductor industry as our customers gained market share within existing markets and launched products which are taking ARM technology into new markets. This quarter we have seen multiple market leaders announce exciting new products including computers and servers from Dell and Microsoft, and embedded applications from Freescale and Toshiba. In addition, ARM and TSMC announced a partnership to optimise next generation ARM processors and physical IP and TSMC's FinFET process technology.
All of these new products are the result of technology engagements over many years, and ARM's long-term commitment to invest in the development of innovative technology."
ARM continues to add dozens of mobile and embedded licensees, who are eager to get there hands on its power-efficient, high-performance architecture. [Image Source: Digital Trends]
One interesting metric was ARM Holdings' addition of two new Mali licensees. Mali is ARM Holdings'
graphics processing unit (GPU) intellectual property core
. It competes with rival IP core designs from Imagination Technologies Group plc. (
), another UK firm.
Q4 2012 will be a pivotal one for ARM as it will mark the launch of the
first ARM-powered Windows PCs
Overall the semiconductor industry is seeing a period of soft demand, down 4 percent from the second calendar quarter of 2011. But ARM continues to buck that trend, and analyst expectations, shipping 9 percent more chips than it did during last year's second quarter.
"We are going to continue to work with them to make sure they understand the reality of the Internet. A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis
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