ARM's strong numbers quell smartphone market health fearsComments Off on ARM's strong numbers quell smartphone market health fears
ARM Holdings shrugged off fears about a smartphone slowdown, but robust first-quarter revenues were not enough to calm the concerns of some City sceptics.
The Cambridge-based iPhone chip designer, which supplies semiconductors to Apple and other smartphone makers, revealed revenues grew 14% to $398 million (£277 million), with pre-tax profits up 14% to £137.5 million.
Licensing revenues increased 24% to $135.3 million, but royalty revenues — a better reflection of smartphone demand as they represent the cut ARM gets from its customers’ sales — rose 15% to $192 million, missing analysts’ estimates for the second quarter in a row.
The FTSE 100 company increased spending on research and development by a third to £133 million.
Segars said the rise in smart products, such as connected cars, is “driving our licensing”. He insisted that once people start buying these products, royalty revenues will follow suit.
Liberum analyst Eoin Lambe said: “We struggle to see how ARM can maintain the current moment in licensing revenue.”
Shares surged 38p, 4%, to 1002p.