Please ensure Javascript is enabled for purposes of website accessibility

ARM Holdings Soars After Earnings Surge 58%

By Maynard Paton - Apr 23, 2013 at 12:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ARM Holdings reports bumper first-quarter results.

LONDON -- The shares of ARM Holdings (ARM) (ARMH) soared 73 pence, or 8%, to 942 pence during early London trade this morning after the FTSE 100 member announced first-quarter profits had surged 58%.

ARM, which designs and licenses microchips for mobile phones and other digital devices, said its earnings had advanced from 3.36 pence to 5.31 pence per share during January, February, and March.

The company also said its first quarter had seen the number of ARM-based chips shipped by customers rally 35% to 2.6 billion units. The progress helped ARM's Q1 revenue improve 28% to 170 million pounds and pre-tax profit climb 44% to 89 million pounds.

ARM's net cash position improved by 42 million pounds during the three months to finish the quarter at 562 million pounds.

Warren East, ARM's chief executive, said:

ARM has delivered another quarter of strong revenue and earnings growth, driven by robust licensing and record royalty revenue.

ARM's royalty revenues again outpaced the wider semiconductor industry. This outperformance has been driven by market share gains in key end markets including digital TVs and microcontrollers. In addition, the growth in smartphones and tablets continues to benefit ARM.

While East claimed second-quarter revenue would be in line with current market expectations, he added revenue for the full year would be "at least" in line with City forecasts.

Prior to today, City experts had expected ARM to report earnings of 20 pence per share and a dividend of around 5 pence per share for 2013. Those projections currently equate to a P/E multiple of 47 and an income yield of 0.5%.

Of course, whether today's bumper results, the lofty P/E valuation, and the wider prospects for the microchip industry all combine to make ARM a buy is something only you can decide.

But if you already own ARM shares and are looking for alternative buying opportunities, this exclusive wealth report reviews five particularly attractive possibilities.

Indeed, all five opportunities offer a mix of robust prospects, illustrious histories, and dependable growth rates, and have just been declared by the Fool as "5 Shares You Can Retire On"!

Just click here for the report -- it's free.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ARM Holdings plc Stock Quote
ARM Holdings plc
ARM Holdings plc Stock Quote
ARM Holdings plc

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.