LONDON Well, we are well into the first quarter reporting season, and if anyone was hoping for big improvements after the disastrous end to last year’s financials, they will be more than disappointed.
Almost all the chip groups have reported falling revenues and some really serious losses.
Yet there were also reasons to be hopeful. As ARM's CEO Warren East calls it, 'there are good reasons to feel optimistic about short term growth but maybe the medium term is more problematic."
As East sees it, the last two quarters have been devastating because few people were buying chips –and its processor IP—due to a massive destocking in the chain in an attempt to deal with surplus inventory.
That was never going to last, and now many OEMs have reached the stage where they need to restock. "Foundries are rebounding spectacularly."
When asked if he really meant 'spectacularly', there was a moment's silence before East cautioned that "everything is relative, of course."
But his very pertinent point was to query whether this renewed activity could just be a flash in the pan, because many of his customers' customers do not see that much 'visibility' of who will be able to buy these PCs, mobile phones and consumer electronics gear.
Certainly, things are not going to get back to normal seasonality for a while, and maybe a long while.
ARM’s own figures for the first quarter, at least when translated into its local currency of U.K. pounds, were pretty satisfactory, and East stressed have once again outperformed the semiconductor market. Sales were up 18 percent compared with the corresponding quarter last time, with pre-tax profits 12 percent better.
The company has clearly benefitted from the stronger dollar as it books 95 percent of sales in dollars but reports in sterling. In dollar terms, sales in the quarter, at $120.9 million, were actually down 10 percent year-on-year.
Yet ARM is very much sticking to its earlier guidance, made in February, that this will continue to be a difficult year, and anticipates that, when expressed in dollar terms, "revenues will be between 16 and 17 percent off what we achieved in 2008, but then that is in a market that is expected to be about 25 percent lower."