Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, microprocessor designer ARM Holdings (ARMH) has received a distressing two-star ranking.

With that in mind, let's take a closer look at ARM and see what CAPS investors are saying about the stock right now.

ARM facts

Headquarters (founded)

Cambridge, England (1990)

Market Cap

$21.1 billion

Industry

Semiconductors

Trailing-12-Month Revenue

$988.0 million

Management

CEO Warren East

Co-Founder/Chief Technology Officer Michael Muller

Return on Equity (average, past 3 years)

12.4%

Cash/Debt

$881.8 million / $9.3 million

Dividend Yield

0.5%

Competitors

Intel

MIPS Technologies

Rambus

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 11% of the 915 members who have rated ARM believe the stock will underperform the S&P 500 going forward.

Earlier this month, one of those Fools, Gainster, succinctly summed up the ARM bear case for our communtiy:

I don't want to be overly pessimistic, but the facts are overwhelming, ARM is extremely overpriced, they lost the single technological advantage they had, they are competing with Intel that has a major brand and an enormous R&D budget. The mere fact that a phone needs two CPU's, tells us that the world is ready for something more powerful and Intel is ready to deliver.

Based on an assumption that the P/E has to go down to around a more reasonable level of 20, then the share price should go down to a quarter of the current share price. Further there will be some earnings losses, which will push down the price further down.