Belfast Telegraph

Arm can stand up to this undeserved snub

BY JAMES MOORE

Buy on the rumour, sell on the news, is an old City saying. The Cambridge-based chip designer Arm Holdings, whose products power smart phones, tablets and a host of other gadgets, was the victim of it yesterday.

Its shares initially fell 7 per cent even though it announced revenues were up by more than a quarter, and profits by more than a third – better than the City’s consensus forecasts. But the market wanted an excuse to dump the shares, which have been run up strongly in recent weeks, and it found it in the royalties, the fee the company takes from every chip sold. They grew by “only” 14 per cent.

 

Cue a bout of profit-taking despite the company arguing that the comparable industrywide number was 2 per cent. In the meantime, it sold a truckload of new licences to make Arm chips, many to new customers, and there appears to have been precious little impact on the numbers from Intel’s aggressive move into the smartphone chip market. Actually, there’s ample room for two, given the expansion of the market for smartphones and tablets globally as more and more people move into income brackets where they become affordable.

 

The only real disappointment with Arm is that there aren’t more like it on these shores. But is there a risk of it falling into the arms of an overseas predator? The experience of Dell with Autonomy, another one-time UK tech champion, may make the Americans more cautious than they were. Not that Arm needs to worry too much. The shares still enjoy a sky-high rating, even after yesterday’s slippage, providing it with some formidable armour.

Belfast Telegraph Digital

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