ARM ups revenues, sees shares slide

February 05, 2014 // By Graham Prophet
Processor IP market leader ARM reported its figures for the last quarter of 2013 yesterday and despite recording revenues of $303million for the quarter – exceeding market expectations and taking the company comfortably above an annual run-rate of $1billion – the company’s shares were marked down significantly the London market.

ARM said that it signed 121 new processor licences signed in the year, 25% were to new customers taking first ARM licenses – the company cites these figures as helping to secure its future revenues, as royalty payments lag licence deals by many months. ARM quotes over 10bn chips shipped in 2013 tha tused its IP; over 50% of these were shipped by companies building chips beyond the mobile communications sector including into microcontrollers, enterprise networking equipment, digital TVs, and “about one third of all digital electronic devices.” ARM says it continues to outperform the semiconductor industry as whole. ARM shipments grew 20%, relevant industry shipments grew 4%.

ARM’s royalty revenues, specifically, were weaker than predicted for the last quarter of 2013 ($170million, up only 7%), attributed to slackening demand for Apple and Samsung high-end smartphones. Smartphones provide close to half ARM’s royalty stream.

Financial markets have demonstrated before that they are very sensitive to negative comment about any of ARM’s target market sectors; the firm’s shares trade at a high price/earnings ratio which may contribute to the slide of nearly 6% in the share price in one day. After many years in which ARM stood almost alone in making substantial revenues from the IP business model, investors now look for potential impact on its prospects from other players such as Imagination Technologies.