ARM beats forecasts in Q3

Sales and profits at chip designer ARM Holdings beat expectations in the third quarter and the firm's outlook was upbeat, as it has entered the final stretch of the fiscal year with a record order backlog and robust opportunity pipeline.

Sales and profits at chip designer ARM Holdings beat expectations in the third quarter and the firm's outlook was upbeat, as it has entered the final stretch of the fiscal year with a record order backlog and robust opportunity pipeline.

The semiconductor intellectual property group said that total revenue in the three months to September 30th rose 20% in sterling terms from £120.2m to £144.6m, ahead of the consensus estimate of £140m.

Licensing revenues rose 17%, while royalties surged 30%, compared with last year.

Adjusted pre-tax profit jumped 22% from £55.7m to £68.1m - this was adjusted for acquisition-related and share-based payment costs, and disposal and impairment of investments. Meanwhile, earnings per share improved from 3.05p to 3.71p, surpassing 3.60p forecast.

Chief Executive Officer Warren East said: "ARM has delivered another quarter of strong revenue and earnings growth. As we move into an ever more connected world of mobile computing, cloud-based networks and the Internet-of-Things, ARM is seeing increased demand for its high performance and low power technology.

"This demand is helping to drive ARM's licensing revenues and this quarter we saw market leaders license ARM's advanced processor technology for next generation super smartphones, tablets, and mobile and embedded computing applications."

Meanwhile, he said that ARM's royalty revenues outpaced the industry with continued market share gains in key end markets including digital TVs and microcontrollers.

As for the outlook, the firm said: "ARM enters the final quarter of 2012 with record order backlog and a robust opportunity pipeline. This combination points to another strong quarter for licensing revenue in Q4.

"ARM's Q4 royalty revenue is generated from third quarter chip shipments. Data from our customers suggests a moderate sequential increase in ARM's royalty revenue in Q4. We therefore expect group dollar revenues for the fourth quarter to be in-line with current market expectations."

Net cash at the end of the period was £477.9m, down from £495.9m at June 30th.

As of 08:30 shares of ARM Holdings are rising by 2.69 per cent to the 610.5p level.

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