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Arm stock soars despite smartphone slowdown(City A.M. (UK) Via Acquire Media NewsEdge) BRITISH chip-maker Arm Holdings was boosted by a demand to licence its technology from manufacturers during the second quarter, which compensated for a slowdown in its royalties from the sale of smartphones. Arm's shares led the FTSE 100 risers yesterday as investors poured into the tech stock sending its shares soaring 5.7 per cent to 881p, after it reported a nine per cent rise in profit to £94.2m during the quarter to 30 June With smartphone growth slowing, nearly all Arm's revenue growth was the result of chipmakers signing 41 new licences for its processors. That prompted a 42 per cent jump in revenue, to £187.1m, across applications from wearable technology to networking equipment. "Our continued strong licensing performance reflects the intent of existing and new customers to base more of their future products on Arm technology. The 41 processor licences signed in the second quarter were driven by demand for Arm technology in smart mobile devices, consumer electronics and embedded computing chips," said Arm chief Simon Segars. "This bodes well for growth in Arm's medium- and long-term royalty revenues." ANALYST VIEWS By Oliver Smith WHAT DID YOU MAKE OF ARM HOLDINGS' SECOND QUARTER RESULTS? JULIAN YATES INVESTEC The stock has been weak, but with a) no structural issues here (we see cyclical issues causing the royalty weakness), b) royalty growth is likely to pick up, plus c) licence strength suggesting strong medium-term royalties, we see current weakness as a buying opportunity. ADNAAN AHMAD BERENBERG Our Buy thesis hinges on the fact that as the wireless market (smartphones and tablets) switch to newer technologies - either higher core counts (single, dual to multi-core) or moving from 32-bit architectures to 64-bit - Arm should see royalty rate inflation. NICHOLAS JAMES NUMIS Generally, the strength in Arm's licensing (over 42 per cent year-on-year growth has to be acknowledged as quite stunning) and its engagement in new products is clearly driving huge confidence in the longer term growth prospects for the business. (c) 2014 City A.M. |