Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Jim Oravetz who wrote (672)	1/28/2003 2:47:07 AM
From: Cy B	Respond to of 912

ARM Holdings PLC Preliminary Results For The Year Ended 31 December 2002 ARM Holdings plc announces fourth quarter revenues of £32.3 million and pre-tax profit of £5.5 million CAMBRIDGE, UK, 28 January 2003—ARM Holdings plc [(LSE: ARM); (Nasdaq: ARMHY)] announces its unaudited financial results for the fourth quarter and the twelve months ended 31 December 2002. FINANCIAL HIGHLIGHTS (US GAAP) Twelve months ended 31 December 2002 Total revenues up 3% to £150.9 million (2001: £146.3 million). At constant exchange rates, total revenues up year on year by 7%. Licensing revenues up 8% to £83.0 million Profit before taxation at £47.4 million (2001: £50.3 million) before restructuring costs of £2 million Cash balance of £130.3 million at year end up from £121.7 million at end Q3 and £104.5 million at 31 December 2001 Earnings per fully diluted share (pre restructuring costs) of 3.3 pence. Earnings per fully diluted share (post restructuring costs) of 3.1 pence (15.0 cents per ADS) (2001: 3.3 pence and 14.5 cents respectively) Fourth quarter ended 31 December 2002 Total revenues at £32.3 million (Q4 2001: £40.2 million), 3% lower than Q3 2002 Royalty revenues up 26% sequentially to £7.8 million (Q3 2002: £6.2 million) on record quarterly unit shipments of 127 million 13 licenses signed in the quarter. Number of semiconductor partners increases to 108 Profit before taxation at £7.5 million (Q4 2001:£13.8 million) before restructuring costs of £2 million Total workforce reduced by approximately 12% to 721 at year end, giving rise to annual savings in employee costs of approximately £5 million. Net cash inflow from operating activities of £15.8 million in Q4. Net cash up by £8.6 million in the quarter after £2 million outflow on restructuring costs and £1.5 million investment in Superscape PLC Earnings per fully diluted share (pre restructuring costs) of 0.5 pence. Earnings per fully diluted share (post restructuring costs) of 0.4 pence (1.7 cents per ADS) (Q4 2001: 0.9 pence and 3.9 cents respectively) * Each American Depositary Share (ADS) represents three shares Commenting on the fourth quarter and full year results, Sir Robin Saxby, Chairman, said: "Although, following our Q3 results, we adjusted our medium term revenue expectations and implemented cost base reduction, our competitive position in the intellectual property licensing business has strengthened and the long term prospects for ARM continue on a positive trend. It is encouraging to see that the momentum behind our business has given rise to an increase in royalty revenues in the fourth quarter." Warren East, Chief Executive Officer, added: "Despite the difficulties presented by tough industry conditions, our team has responded well to the operational challenges in the quarter. The ARM1136J-S™ product was successfully delivered to lead partners as planned, the reduction in the workforce was managed sensitively and efficiently and the sales team closed a number of important strategic license deals. We expect the exact timing of signing of license deals to continue to be hard to predict, and in view of this our guidance on revenues in the short term continues to be flattish. As and when the market recovers we have the opportunity to increase our R & D spend further." Tim Score, Chief Financial Officer, said: "ARM's Q4 results demonstrate that the company continues to be profitable and cash generative at the reduced revenue levels resulting from the slowdown in licensing activity. Efforts to improve working capital management have contributed to the increase in the cash balance to over £130 million and tight management of the cost base in 2003 will enable us to reduce the impact on profitability of lower revenues in the current market conditions." Operating review for the twelve months ended 31 December 2002 Market conditions The challenging economic environment and severe downturn in the semiconductor industry persisted throughout 2002. In this context, ARM reported robust results in the first half of the year. However, when the industry upturn foreseen by many commentators in the second half did not materialise, we experienced some deferment of licensing decisions by our partners and a consequent slowdown in licensing activity. This slowdown in licensing activity caused us to realign our expectations for short to medium term revenue growth and we took the decision to adjust our cost base to be commensurate with our revised expectations. Despite the unhelpful market background we continue to invest in the future ARM technology roadmap by maintaining a high level of research and development expenditure and are therefore particularly pleased that even with a slowdown in licensing activity in the second half we remain strongly profitable and cash generative. Indeed, in the second half alone the total net cash inflow from operating activities was £30.8 million giving rise to a year end cash balance of over £130 million. Current trading and prospects We stated in our Q3 earnings release that the key long-term growth indicators for the company remain healthy. This view is supported by our Q4 results with a further 13 licenses signed, a meaningful sequential improvement in royalty revenues and strong cash flow generation. However, although we have reasonable visibility of future revenues due to the strategic nature of our relationships with our partners, the licensing revenue already in the backlog and the current run rate of our non-licensing revenue streams, we anticipate that the timing of the closure of licensing deals will remain unpredictable, particularly in the short term. Moreover, the company's reported revenues are exposed to further weakening of the US dollar. Therefore, in spite of an increased contribution from royalties in Q4 of 2002, it is our expectation that total quarterly revenues will remain flattish for the foreseeable future with revenues in Q1 2003 likely to be at the lower end of the range. As 2003 progresses, we anticipate momentum being provided inter alia by the licensing of our newer cores (ARM1136J-S and ARM1026EJ-S™), the introduction of new platform products, the introduction of a number of new development systems products and the positive momentum in royalty revenues. arm.com