ARM’s Sales Beat Estimates on Smartphone, Tablet Demand
ARM Holdings Plc (ARM), whose chip designs power Apple Inc. (AAPL) (AAPL)’s iPhone and iPad, jumped the most in more than four years after reporting sales that beat estimates as demand increased for its graphics and processing technology.
Revenue rose 29 percent to 170.3 million pounds ($260 million) in the first quarter, the Cambridge, England-based company said today. Analysts predicted 160 million pounds, the average of estimates compiled by Bloomberg.
ARM Chief Executive Officer Warren East said in March he would retire July 1 after almost 12 years in charge. His successor, Simon Segars, will focus on increasing the company’s share of semiconductor designs and moving ARM’s technology into connected devices, Web-enabled “smart” televisions, tablets and smartphones. ARM’s chip designs compete with patents from semiconductor makers such as Intel Corp. (INTC)
“We’ve made an encouraging start to 2013 with more leading companies deploying our technology in their products,” ARM Chief Financial Officer Tim Score said on a conference call.
ARM’s revenue increase this year will be “quite well ahead of” the industry’s projected growth in the “mid-single digits,” Score said. That means ARM’s sales will be at least in line with market expectations, he said.
Second-quarter revenue will be in line with market expectations, ARM said in a statement, as first-quarter data “points to a sequential decrease in industry-wide revenues of around 10 percent.” Analysts project 161.9 million pounds on average.
The “Internet of things,” which include connected appliances such as thermostats that can be controlled with mobile phones, or wireless medical-monitoring devices, represents one of ARM’s fastest-growing markets. The embedded- processing business grew 25 percent last year and ARM got more than half of its sales from products other than mobile phones for the first time in the third quarter of last year.
“There’s huge potential volume there,” Segars said in an interview. “If anything is going to compare to mobile, Internet of things is one of them.”
Global shipments of personal computers, tablets and mobile phones will increase 9 percent to 2.4 billion units in 2013, according to researcher Gartner Inc. Wireless devices will account for the growth as consumers swap PCs for lower-priced tablets and mobile phones, Gartner said.
“There’s an enormous amount of growth ahead of us,” Segars said.