ARM profit up as growth slows

Chip maker ARM Holdings today turned in strong third quarter financial results following the announcement of a controversial acquisition in August.

The company, which designs chips used in mobile phones and digital cameras, reported pre-tax income of £13.3m compared to the consensus estimate of £11.1m and £10.2m in the second quarter.

ARM was criticised for paying too high a price - $910m - to buy US chip designer Artisan when it announced its plans in August. The deal continues to move forward, having received approval from the US Federal Trade Commission and Department of Justice. The next step is shareholder voting, which ARM says will take place in December 2004 or January 2005.

Revenue was healthy at £39.4m, up 7 per cent from £36.9m in the previous quarter.

Licensing revenue, however, was flat as the Cambridge-based company signed 12 licenses, including 3 new partners, which is lower than the 20 signed in the second quarter.

CEO Warren East said in a statement: "We are encouraged by the 7 per cent quarter-on-quarter increase in total dollar revenues in the seasonally weaker third quarter."

Looking forward, ARM expects growth in the semiconductor market will be slower in the second half of the year than the first. It predicts year-on-year revenue growth in dollars of 30 per cent in 2004 and in 2005 of about 20 per cent in pounds.

Also today at the first ARM developers' conference in California, the company launched its new Cortex-M3 processor which provide high performance in embedded applications.