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

To: Jim Oravetz who wrote (601)	1/31/2001 8:49:47 AM
From: W D J Moore	Respond to of 912

Some conference call comments on results and outlook: LONDON (AFX) - ARM Holdings PLC said it has seen no slowdown in spending on research and development among its customers, including mobile phone makers. "Everybody's doom and gloom about wireless, but the market is still growing," chief financial officer Jonathan Brooks told a conference call to journalists. "We have not seen any of our customers slowing down core R&D activities, so ARM seems insulated to some extent from the market dynamics." Recent concerns around ARM had centred on slowing growth in the mobile handset market, with customers Marconi and Nokia both cautioning on sales. Reports of excess inventory in the supply channels also led some analysts to see pressure on shipments and royalty revenues. Despite these concerns, Brooks said he was comfortable with forecasts for the next two quarters. "We see a lot of people saying there's going to be a downturn. All we can say is, at the moment, we don't see a particular downturn for our business," he said. "We generally have two quarters of visibility, and we've had two quarters of visibility for some time, so we feel comfortable to comment on that. Beyond then, it's too difficult to judge." Brooks said demand had remained firm because customers increased spending on the development of new products, to try and offset any slowdown which was caused by the commoditization of existing offerings. ARM today reported fourth-quarter pretax profit up 53 pct year-on-year to 10.1 mln stg, with revenues up 58 pct to 29.8 mln stg -- above analysts' forecasts. Of total revenues, just over a quarter came from royalties, with around half of that coming from wireless activities. Brooks said it does not expect this ratio to change in the medium term. "Fundamentally we are a company that develops new technology and licences it ... we always see licensing as an important share of total revenues, we don't really see royalties becoming the lion's share for a long time -- in fact we can't actually see it," he commented. ARM said long-term margins were sustainable despite the focus on licensing revenues, through the close management of R&D spending. He also dismissed fears that margin pressure in the mobile market would feed down to ARM's figures. "The amount of our revenues that are sensitive to mobile phone margins is not that great, so I don't think it will necessarily feed through to us," Brooks said. ARM was also confident over the company's landmark licensing agreement with rival chip designer Motorola, which will see ARM's semiconductor cores offered to Motorola customers. Concerns had been raised after Motorola cancelled several development contracts and slashed earnings growth forecasts in its semiconductor operations, just weeks after signing the ARM deal. "Maybe Motorola should have licensed ARM a lot earlier, and they wouldn't be finding things so hard," Brooks quipped. "But they're a semiconductor company in a cyclical industry. We're not a semiconductor company, we're an intellectual property company, so to some extent we are protected from the big cycles."