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ARM said that revenues for the third quarter were up 42 percent from the same period last year to STG37.6 million, and were four percent higher than in the second quarter of 2001. Profits before taxation increased by 46 percent to STG12.9 million from Q3 2000, and were six percent better than the previous quarter. Earnings per fully diluted share were STG0.09, up from STG0.07 in Q3 2000.
Although ARM said it saw a decline in royalty and service income, the drop-off had been compensated for by an increase in licence revenue. According to Warren East, ARM's chief executive officer, demand for licences of its technology had remained "resilient" and revenues from licences in the third quarter were more than double the corresponding level for last year. Licence revenues in the third quarter of 2001 were STG21.8 million, which accounted for close to 60 percent of the company's total revenues.
The company also said that it had signed up eight new licensees in the third quarter, while five existing partners purchased licence "upgrades" and four purchased "derivate" licences. Its customer base is now just over 70, according to the company.
ARM added that it was encouraged to see that its unit shipment grew from 98 million in Q1 to 103 million in Q2 (the company receives royalty data one quarter in arrears). This growth, said the company, was mainly due to five new partners starting to ship products containing ARM processors and it made its biggest gains in the printer, digital camera and hand-held games markets.
"Despite difficult market conditions in the electronics industry, our business continues to deliver strong performance and we continue to experience high demand for our products and services," said ARM's recently appointed executive chairman, Robin Saxby, who was previously the company's chairman and chief executive.
However, ARM's royalty revenues did slip in Q3 2001. In its latest quarter, royalties were STG6.4 million and accounted for 17 percent of total revenues. But, in Q3 2000, such revenues were worth STG7.3 million or 28 percent of total revenues. The company put this fall down to a decline in the number of higher priced networked products sold and an increase in lower priced smart card products it sold.
The semiconductor industry has been one of the sectors hardest hit by the technology downturn. Many of its leading players have recently reported disappointing results and have seen their share prices collapse as demand for their products and services has slowed down.
Irish semiconductor IP company, Parthus Technologies, has not been immune from the suffering in the industry. Although it reported a 23 percent increase in licensing revenue in its Q2 2001 from the same period last year, net losses for the quarter were over USD5 million. Its share price has also taken a tumble and has been steadily falling since the end of July. It is trading in a 52-week range on the London Stock Exchange of between STG2.18 and STG0.183.
However, according to Paul Phelan, technology analyst in Davy Stockbrokers, ARM's results are encouraging for Parthus, which is due to release its Q3 results on Wednesday.
"ARM has been a role model for Parthus and the fact that ARM has increased its licensing revenue has given us confidence that Parthus could post okay results, as licensing is the biggest part of its business," said Phelan. "But, it's important for Parthus to show in those results that it has grown revenues and to say it is confident that it can continue to increase them."
ARM had been a shareholder in Parthus, but Phelan said that the UK company has sold its stake in Parthus. However, the two companies have maintained a strong relationship and have a cross-licensing agreement.
ARM Holdings can be found at http://www.arm.com
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