ARM Shrugs Off Slowdown as Second-Quarter Sales Beat Estimates

ARM Holdings Plc (ARM), whose chip designs power Apple Inc. (AAPL)’s iPhone, said second-quarter revenue climbed 15 percent, beating analysts’ estimates, even as some customers delayed orders.

Sales climbed to 135.5 million pounds ($210.5 million) in the three months ended June 30 from 117.8 million pounds a year earlier, the Cambridge, England-based company said today in a statement. Analysts predicted revenue of 129.7 million pounds, the average of 19 estimates compiled by Bloomberg. ARM said it may not see the traditional gain in revenue from royalties in the fourth quarter as demand remains difficult to predict.

“When you’re planning forward, you’re likely to be a bit more cautious,” Chief Financial Officer Tim Score told reporters today. Smartphone sales will continue to grow “albeit a little bit muted than where they’ve been previously.”

ARM, which reports royalty sales a quarter in arrears, will see a “small sequential increase” in the third quarter. Customers including Texas Instruments Inc. (TXN) this month forecast revenue that missed some estimates as demand slowed.

The U.K. company’s shares rose as much as 5.1 percent, the most in intraday trading in more than two months. ARM was up 4.8 percent at 508 pence at 8:42 a.m., paring the decline this year to 14 percent.

ARM will get a boost from the release of Microsoft Corp. (MSFT)’s Windows 8 operating system, a version of which will run on ARM technology. It will be the first time ARM processers use the Windows system. Samsung Electronics Co. (005930), the largest phone maker, will offer a tablet that features the software, people familiar with the matter said this month. Apple’s iPad is based on ARM technology, as are most tablets on sale today.

Apple shares declined yesterday and some suppliers fell in U.S. and Asian trading after profit and sales at the world’s most valuable company fell short of analysts’ projections for the second time since 2003.

To contact the reporter on this story: Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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