July 24 (Bloomberg) -- ARM Holdings Plc, the chip designer whose products power Apple Inc.’s iPhones and iPads, reported second-quarter sales that beat estimates as phone and tablet makers demanded more advanced graphics and processing technology.
Revenue increased 26 percent to 171.2 million pounds ($263 million) in the second quarter, ARM said in a statement today. Analysts had predicted 165.1 million pounds, according to the average of estimates compiled by Bloomberg.
Simon Segars, who became chief executive officer of the Cambridge, England-based company this month, is focused on increasing its share of the markets for semiconductor designs for connected appliances and Web-enabled “smart” televisions, as well as tablets and smartphones. ARM won business in the quarter for its designs for graphics chips and energy-saving processors, as well as its technology for servers and mobile base stations.
“We benefited from the growth of smartphones, tablets and smart TVs and increased marketshare of embedded products like cars, industrial automation and consumer white goods,” Chief Financial Officer Tim Score said in a call with reporters today.
ARM declined 1.1 percent to 888.5 pence in London trading, erasing earlier gains of as much as 6 percent, after ARM customer Broadcom Corp. forecast slowing smartphone sales. Broadcom fell about 16 percent in Nasdaq Stock Market trading at 12:13 p.m in New York.
ARM boosted its interim dividend by 26 percent. The company will pay 2.1 pence per share, up from 1.67 pence a year earlier, to shareholders on Oct. 4.
ARM said it expects a “small sequential increase” in industry revenue in the third quarter based on its performance last quarter. Score said on a conference call today that the company expects full-year revenues to be in-line with or better than market expectations of $1.08 billion.
“In part, this outperformance was driven by the growth in smartphones and mobile computing,” Segars, who took over July 1 after Warren East retired after more than a decade in office, said in a statement. “We continue to see demand for ARM’s next-generation technology.”
Apple reported smartphone sales yesterday for the third quarter that beat estimates. The Cupertino, California-based company sold 31.2 million units of the iPhone, its best-selling and most profitable product. Analysts had estimated 26.1 million on average.
ARM pretax profit fell to 15 million pounds in the second quarter from 54.8 million pounds a year earlier. Excluding taxes, acquisition costs, investment losses and other charges, profit was 86.6 million pounds in the second quarter compared to 66.5 million pounds a year earlier, the company said.
The “Internet of things,” which include connected appliances such as thermostats that can be controlled with mobile phones and 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.
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