ARM Holdings Beats on Both Top and Bottom Lines

Just the facts, Fool.

Seth Jayson
Seth Jayson
Feb 8, 2013 at 12:00AM
Other

ARM Holdings (Nasdaq: ARMH) reported earnings on Feb. 5. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), ARM Holdings beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share grew.

Gross margins contracted, operating margins shrank, net margins expanded.

Revenue details
ARM Holdings booked revenue of $266.9 million. The 21 analysts polled by S&P Capital IQ anticipated revenue of $246.3 million on the same basis. GAAP reported sales were 24% higher than the prior-year quarter's $214.5 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.20. The eight earnings estimates compiled by S&P Capital IQ predicted $0.19 per share. GAAP EPS of $0.05 for Q4 were 25% higher than the prior-year quarter's $0.04 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 94.8%, 40 basis points worse than the prior-year quarter. Operating margin was 35.6%, 30 basis points worse than the prior-year quarter. Net margin was 25.9%, 190 basis points better than the prior-year quarter.


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Looking ahead
Next quarter's average estimate for revenue is $250.3 million. On the bottom line, the average EPS estimate is $0.21.

Next year's average estimate for revenue is $1.05 billion. The average EPS estimate is $0.89.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 825 members out of 913 rating the stock outperform, and 88 members rating it underperform. Among 253 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 220 give ARM Holdings a green thumbs-up, and 33 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ARM Holdings is hold, with an average price target of $35.67.

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