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TMCNet:  ARM Holdings Raises Interim Dividend 7.1% As Profit Grows

[July 22, 2014]

ARM Holdings Raises Interim Dividend 7.1% As Profit Grows

(Alliance News Via Acquire Media NewsEdge) LONDON (Alliance News) - ARM Holdings PLC Tuesday raised its interim dividend as it saw pretax profit rise in the half year to end-June, driven by a strong performance from its licensing operations which offset weaker royalty revenues.


The chipmaker proposed an interim dividend of 2.25 pence, up 7.1% from 2.1 pence in the previous year.

The company said it enters the second half of the year with a healthy pipeline of opportunities, and expects to see its royalty revenue grow in the second half as the semiconductor industry improves.

As a result of this improvement, it expects to meet market expectations for US dollar revenues for the full year.

Excluding costs for acquisitions, restructuring, share-based payment costs and other exceptional items, ARM posted a pretax profit of GBP191.3 million, up from GBP176.0 million in the previous year, as revenue rose to GBP373.7 million from GBP341.5 million. Including these costs pretax profit was GBP146.0 million, up from GBP82.1 million.

ARM posted a restructuring charge of GBP8.4 million during the year as it cut around 130 people following a review of skills and capabilities across the business. ARM said it was reinvesting new skills and capabilities to further strengthen its organisation for future growth; at the end of the first half it had grown net headcount by 211, it said.

In the second quarter the company saw royalty revenues decline to GBP80.3 million from GBP88.1 million, which ARM attributed to seasonal trends and inventory management in parts of the electronics supply chain, as companies sold off older 3G handsets ahead of the take up of new 4G enabled handsets.

Average royalty revenue per chip was 4.6 cents, down from 5.0 cents in the second quarter, as lower cost ARM-based microcontrollers and smartcards grew faster than high-value chips into smartphones and tablets.

Licence revenues rose 36% to GBP89.6 million from GBP66.1 million in the previous year. Order backlog at the end of the quarter was down around 10%, it said, although it expects its licensing opportunity pipeline to growth this backlog in the second half.

ARM signed 41 processor licenses across mobile computing, consumer electronics and embedded intelligent devices during the half year, taking its total number of licenses signed to over 1,100. The new licences also included further licences for its ARMv8-A and Mali processor technology, which "bodes well for growth in ARM's medium and long term royalty revenues," said Chief Executive Simon Segars in a statement.

Shares in ARM were trading up 1.7% at 848.00 pence Tuesday morning.

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