Déjà vu? ARM Destroys More Analyst Predictions With $136M USD in Profit
April 23, 2013 11:40 AM
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License signing remains strong -- ARM is still the king of mobile
ARM Holdings Plc (
) is the embedded device, smartphone, and tablet industries' undisputed king. Whether it's an Apple, Inc. (
) i-device, an Android gadget, or a Windows Phone, the processors that power each of these devices are typically chips based on architecture and/or instruction set licensed from ARM.
That hegemony of the electronics industry's most lucrative and fast-expanding markets is paying off in a big way. The company just released its
Q1 2013 earnings report
[press release], which dashes analyst expectations and emphasizes the company is still surging strong.
In Q1 2013 ARM's partners shipped 2.6B chips, a 35 percent growth on a year-to-year basis. And ARM pulled in $263.9M USD (£107.3M) in revenue, with a (before-tax) profit of $136.2M USD (£89.4M) -- up 44 percent from Q1 2012.
Smartphone king ARM blew past analyst expectations. [Image Source: ARM Holdings]
of 13 analysts by UK-based
, a Pearson PLC unit (
), predicted only $239.9M USD (£157.4M) in revenue and $112.6M USD (£73.9M) in profit. Of course,
a track record
over the last few years
of putting analysts'
ARM signed 22 new licensees of its processor architecture. It also signed three more licensees to its Mali GPU architecture. An undisclosed company became the first licensee of Skrymir, a
new Mali GPU
, which ARM bills "ARM's most advanced graphics processor".
Despite signing six licensees (including three new ones) to its low-power Cortex-M embedded architecture -- a category that normally has slim margins -- ARM's royalty fees per chip remained flat at 4.6 cents on a year to year basis, a very good sign. Combined with the exploding growth of low-cost digital devices, it appears ARM Holdings is destined to roll on to even bigger and better earnings in quarters to come.
ARM Holdings [press release]
FT [analyst estimates]
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RE: 136m profit on 2.6b chips shipped?
4/23/2013 12:37:24 PM
You spend some time doodling on a piece of paper. You give the piece of paper to someone. You go home and smurf the internet for the next 6 years. Every week, a nice big check arrives in your letterbox.
Welcome to the world of licensing, you do almost nothing and get money for free. That's why they have an 80% profit margin and HUGE profits for such a tiny tiny company.
Their ROC will be huge as they only money they spend is on R&D, so no fabs or capital investment required.
"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson
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