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To: russwinter who wrote (52733)	10/2/2002 10:35:41 AM
From: russwinter	Read Replies (1) \| Respond to of 54805

Pretty good Motley Fool on ARMHY: MARKET COMMENT ARMageddon By Maynard Paton (TMFMayn) October 2, 2002 The final tech stronghold has been breached. ARM Holdings (LSE: ARM), for so long immune to the downturn within the semiconductor industry, today officially bowed to the inevitable. The microchip designer warned that "continued challenging market conditions" would result in a sales and profit shortfall. The shares responded by plummeting 60% to 50p. Revisit the company's July interim results and you'll understand the share price horror. Just ten weeks ago, shareholders were told: "The resilience of ARM's business model in difficult market conditions has been demonstrated again...In the shorter term... the visibility provided by our sales pipeline and backlog of contracted business give us confidence that growth in the remainder of the year will be consistent with that achieved in the first half." With first half revenues growing at 25%, ARM shareholders could have expected third quarter sales of around £47m. But today's statement informed shareholders to expect revenues of £33m, a 12% decline on the third quarter performance of 2001. At the pre-tax level, an £8m profit is now expected for the quarter just ended. But with ARM anticipating "no significant upturn in business activity before next year", pre-tax forecasts of £66m this year and for £78m next now look wildely optimistic. Needless to say, yesterday's forward price to earnings ratio of 29 offered existing shareholders plenty of downside. Time now to buy ARM? Certainly investors will have to consider a boardroom whose credibility has taken a severe nosedive. That said, don't forget this is the same team who turned ARM from a Cambridge barn-based upstart into a global tech leader. The fact it has taken two years of sector turmoil before ARM succumbed shows the inherent strength of the company's products. A cash pile of £122m also helps underpin the company's longer term growth prospects. Annualising the £8m quarterly pre-tax result and taking a normal 30% tax charge, ARM's earnings per share for the next twelve months comes to 2.2p. A share price of 33p, representing 15 times this bottom-of-the-cycle estimate, would seem a good entry point for one of the more sure-footed tech recoveries around.