Licensing helps ARM exceed Q3 forecasts
Print Edition
Chipmakers licensing more powerful mobile technology like the 64-bit computing in the new iPhone helped Britain’s ARM Holdings’ to beat expectations for the third quarter yesterday.
The company, whose chip designs power nearly all smartphones and most tablets, reported a 36 percent rise in pretax profit to 92.6 million pounds (US$149.6 million), on revenue 27 percent higher at 184 million pounds.
Analysts had forecast sales of 175.8 million pounds and pretax profit of 88.9 million pounds, according to a poll of 25 brokers compiled by the company.
But the strong performance in licensing overshadowed weak smartphone demand over the summer, which resulted in ARM’s royalty revenue missing expectations and there was no forecast that it would bounce back quickly.
ARM licenses its chip designs to chipmaking partners, and it receives a small royalty on every chip its partners ship that includes its technology.
These royalties rose 16 percent to 78.7 million pounds in the quarter, the company said, missing consensus expectations of 83.5 million pounds.
“I think there’s been probably a small inventory correction around smartphones in the third quarter, which may go on for a little bit and which will have a short-term impact,” Chief Financial Officer Tim Score said.
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