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License signing remains strong -- ARM is still the king of mobile

ARM Holdings Plc (LON:ARM) is the embedded device, smartphone, and tablet industries' undisputed king.  Whether it's an Apple, Inc. (AAPL) 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.

ARM Cortex A15
Smartphone king ARM blew past analyst expectations. [Image Source: ARM Holdings]

A survey of 13 analysts by UK-based Financial Times, a Pearson PLC unit (LON:PSON), predicted only $239.9M USD (£157.4M) in revenue and $112.6M USD (£73.9M) in profit.  Of course, ARM has a track record over the last few years of putting analysts' conservative expectations to shame.

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.

Sources: ARM Holdings [press release], FT [analyst estimates]



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By bobsmith1492 on 4/23/2013 7:57:35 PM , Rating: 2
$264 million in revenue, so licensing must be about $0.10 per chip. Sounds pretty reasonable for low-cost embedded ARM processors.


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