ARM shares fall again following Q1 results

ARM says it is still on course to meet end of year market expectations despite a fall in revenues and profits for the first quarter of 2012 over the previous three months.

The drop was purely sequential however, it's year-on-year figures for the first quarter show revenues up 14 per cent to £132.5m and pre-tax profit at £61.9m, an increase of 22 per cent.

ARM's share price fell over five per cent as a result of the figures this morning, down 28.5 pence to 538 pence a share, its second major drop in the past week following concerns voiced by analyst Jefferies on Friday, that commented on "a lack of visibility on the long term potential has stymied sentiment," and precipitated a 3.7 per cent fall.

The majority of the revenue increase came from license revenues for this quarter which increased but 20 per cent year-on-year and now account for 37 per cent of total revenues. Royalties, which represent 51 per cent of revenues, increased eight per cent in a sector that ARM says is experiencing a fall of two per cent.

The sequential fall in license revenues was, says ARM, a result of historically high backlog levels and orders that will be recognised in future quarters.

Royalty revenues have meanwhile been impacted by disruption to semiconductor manufacturing in the hard disk drive market in Thailand as a result of flooding. ARM said the semiconductor supply chain in the region was expected to be fully operational by the middle of this year.

Twenty-two processor licenses were signed in the quarter. 1.1 billion chips were shipped into mobile phones and mobile computers, slightly below the 1.15bn figure a year ago, however, 800 million chips were shipped into consumer and embedded digital devices, up 15 per cent.

ARM CEO, Warren East said the licensing and royalty revenues increase was being driven by the growing proliferation of digital in our lives, which was raising demand for ARM's low power technology.

"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," said East.

The company added that whilst Q1 industry shipments declined sequentially, most analysts expect the industry to recover in the second half. "In that context, ARM expects that group dollar revenues for the full-year 2012 will be in line with current market expectations."

 

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