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Technology Stocks : ARM Holdings (Advanced RISC Machines) plc. -- Ignore unavailable to you. Want to Upgrade?

To: Mats Ericsson who wrote (332)	1/21/2000 12:56:00 PM
From: Mats Ericsson	Read Replies (1) \| Respond to of 912

Merrill, Deutsche Bank reiterate 'buy'. LONDON (AFX) - Shares ARM Holdings PLC bounced back from early weakness after being given a clean bill of health from analysts at Merrill Lynch and Deutsche Bank, both of which repeated their 'buy' recommendations on the RISC chip designer, dealers said. At 2.08 pm, shares in ARM Holdings were up 292 pence, or 9.55 pct at 3,350, some way from their earlier low of 2,800. Over the last two sessions ARM shares have been under pressure from the launch of a new super-fast chip called Crusoe. Crusoe is being developed by Silcon Valley company Transmeta, which is led by Linus Torvalds, the Finnish whizzkid who invented Linux - a rival operating systems to Microsoft's Windows. Its backers include Paul Allen, co-founder of Microsoft, and financier George Soros. Specifically the chip is being targeted at the mobile computing space, offering high performance at a low-cost and with low power consumption. This, claim some, places it in direct competition with Intel's StrongARM (a product licensed from ARM) and with ARM's ARM 10 architectures. Yet the real importance of the Crusoe launch is that, perhaps the first time, it has alerted investors to the prospect that ARM will have competition, particularly in the high-end applications which its architecture portfolio is evolving towards. However some sector watchers the this threat has been overplayed. Andrew Griffin at brokerage Merrill Lynch certainly thinks so. "They are not competitors, so I think it has been 100 pct overplayed. ARM isn't targeting the x86 microprocessor market.... Its clearly this market they (Transmeta) are trying to take a share of and its makes sense. It's a huge market," Griffin said. Pointing towards Transmeta's web-cast on the Crusoe chip, Griffin said it was clear that they weren't yet targeting the hand held size mobile market. Furthermore, Griffin said the chips look highly priced and may use too much power. "Even though they have power consumption advantages over Intel mobile offerings, they still consume 14 times more power than the flagship ARM product right now, Griffin added. He also noted the calm response from the U.S. market to the announcement. Griffin has maintained his 'buy' recommendation and 54 stg target price on the stock. Deutsche Bank analysts Ben Lynch and Helen MacDonell are less sanguine. Although they believe the news is of limited significance they concede it has had an affect an justifable affect on perception. The strong run-up in ARM shares since the beginning of Nov 1999 has been driven by a perception that ARM technology would establish an embedded microprocessor standard for the entire industry, dominating a wide array of applications far from its virtual monopoly over the mobile telecommunications, the analysts claim. Lynch and MacDonell argue that ARM will continue to dominate this field given its earlier-mover advantage and strong position with the leaders in this highly concentrated industry. The real importance is the fact that ARM will face competition in high-end applications and not just from Transmeta, analysts reckon. Therefore they concede that the stock could lose some of its lustre though not enough to remove it from its 'buy' list. Turning to Transmeta, they concede that Crusoe would appear to be a very strong processor on paper but essential to its success, as has been the case with ARM, will be the establishment of a broad community of third-part software and tool developers. Currently this is lacking. Away from the debate of Transmeta, ARM has deal with the more mundane problem of controlling expectations for fourth quarter figures due on Jan 31. Expectations are rising following extremely strong figures from global mobile communications groups over recent weeks. Nevertheless, Deutsche Bank expects that figures to provide an upward jolt for the ARM share price.