LONDON – Processor IP licensor ARM Holdings plc (Cambridge, England) has posted yet another quarter with increased sales and profits as it continues to benefit from being designed into market leading smartphones and tablet computers.
The company's pre-tax quarterly profit rose to £61.9 million (about $100 million) up 22 percent from £50.7 million (about $820 million) in the same quarter a year before. The company's sales revenues for 1Q12 were $209.4 million, up 13 percent on $185.5 million in the same quarter a year before.
However, the company's share price in London fell by about 5 percent, attributed to concerns over royalty rates being flat in the coming second quarter.
The company said that Q1 industry shipments declined sequentially but that most analysts expect the industry to recover in the second half of 2012. ARM recognizes royalties on shipments a quarter in arrears so the declining shipments are likely to lead to reduced royalties in ARM's 2Q12 financial results.
"With more customers choosing to deploy ARM technology in their products, this has been another quarter that underpins the long-term growth opportunity of the business. This growth enables us to invest in future innovative technology as well as delivering increases in profit and cash flow,” said Warren East, CEO of ARM, in a statement.
Total dollar license revenues in Q1 2012 increased by 20 percent year-on-year to $76.8 million, representing 37 percent of group revenues. License revenues comprised $65.2 million from the processor division and $11.6 million from physical IP division. Total dollar royalty revenues in Q1 2012 increased by 8 percent year-on-year to $106.0 million, representing 51 percent of group revenues.
It will be interesting to see how ARM performs in the next few years given Intel is fiercely fighting for shares in smartphone and tablet space. Though the advantage for ARM is the ecosystem it provides but given the past record of Intel and its reputation, ARM will need a good strategy.