LONDON While announcing its year-end results and a trio of big-name licensees for its configurable processor architecture, ARC International plc said it will also begin to offer application-specific platforms that utilize its intellectual property.
ARC (Elstree, England) currently licenses its configurable processor core at the register-transfer level, and offers related peripheral components and software development support, which helped fuel the company's initial public offering in September 2000. But ARC said it foresees a need to offer a greater proportion of subsystem firmware and software, as well as complete systems in the future.
"We already have a processor and we can hone it. In 10 years time we will have the most beautiful processor in the world and nobody will care," said Jim Turley vice president of technology at ARC. "It's the whole package that is important. Our direction is illustrated by our Bluetooth offering.
"The uptake was so swift and so encouraging," Turley said of ARC's Bluetooth product. "Everybody wants to have Bluetooth and nobody wants to spend time learning how it works. Even we licensed part of it from Tality Inc. So yes, you're going to see application-specific ARC-based platforms."
Meanwhile, the company is mainly being driven by the initial license fees it receives for its processor architecture. At the end of 2000 ARC said it had 73 licensing deals with 44 customers, compared with 26 licenses from 17 customers a year earlier.
ARC's sales for fiscal year 2000 increased to about $15.3 million, up from $2.7 million in 1999, and the company said it was on track to move into profitability in 2002. Initial license fees represented about 75 percent of sales in the last fiscal year, while maintenance and service contracts accounted for about 17.5 percent sales and royalties for about 5 percent. ARC said that royalties in 2000 were related to nine end-products currently in production, including a selection of networking routers, digital cameras and set-top boxes.
Nevertheless, losses before interest and tax in 2000 jumped to nearly $28 million, compared to about $8.1 million in 1999.
"For the calendar year we lost a lot of money, but if you zoom in the microscope you'll see we lost more in the third quarter than the fourth quarter," Turley said. "We're losing less each quarter and as we grow we get economies of scale. We're on course."
In addition the company is sitting on a pile of cash, having raised about $182 million by way of its IPO. At the end of last year it had cash reserves of about $210 million.
Turley said that both organic growth and growth by acquisition are expected for ARC, and such acquisitions are now possible to fund either with cash, by offering shares in the company or by a mixture of the two. "Further acquisitions are entirely possible but we're not that close to anything," he said.
ARC's results were accompanied by the announcement of three high-profile licensees.
Infineon Technologies AG (Munich, Germany) has licensed ARC's microprocessor for its next-generation digital subscriber line (DSL) transceiver technology.
VTech Communications Ltd. (Farnborough, England) will use an ARC core that combines microcontroller and DSP capability in its cordless phones.
"This is ideal because then we don't need two cores, simplifying the system-on-chip integration and the software development," said Chris Goodings, manager of the IC Division at VTech Communications, a subsidiary of VTech Holdings Inc. (Hong Kong). "Combined with the ability to develop our own customized DSP extensions, this provides us with the advanced audio DSP processing required for the phone."
The third announced licensee is IBM Corp., which has been an ARC licensee since 1998. Turley said details of IBM's application of ARC's technology remain confidential until the product is available in the market.