ARM beats recession; Q408 revenues up 15pc YoY

CAMBRIDGE, UK: ARM Holdings plc announced its unaudited financial results for the fourth quarter and full year ended 31 December 2008

Q4 financial Highlights (US GAAP unless otherwise stated)

* Q4 2008 revenues at $149.4m, up 15 percent year-on-year (£94.4m, up 47 percent).

* Normalised operating margin at 34.6 percent (US GAAP 24.2 percent)

* Normalised PBT at £33.4m, up 57 percent (US GAAP £23.6m, up 105 percent)

* Normalised EPS at 1.93p, up 54 percent (US GAAP 1.38p, up 86 percent)

* £29.6m cash generated in the quarter

* Final dividend increased by 10 percent to 1.32 per share

Outlook

Semiconductor industry activity slowed down markedly in the fourth quarter and the near-term outlook for the sector remains uncertain. Whilst not immune from the impact of the industry slow down, ARM continues to build an established base of licenses that drives long-term royalty growth. The current licensing opportunity pipeline to enlarge that base further remains robust.

Although there is less visibility than usual at this time of the year, we believe that ARM is positioned to perform resiliently in the context of the challenging trading environment. Unless conditions deteriorate to a greater extent than generally anticipated, we expect group dollar revenues for full-year 2009 to be at least in line with current market expectations of around $460 million.

Warren East, Chief Executive Officer, ARM, said: "We are pleased to see ARM technology being increasingly utilised in innovative consumer electronics products, leading to the highest ever group revenues for both the fourth quarter and for the full year.

"We saw strong demand for new ARM technology, with industry leaders continuing to license our latest generation processors and physical IP. ARM has built a base of more than 580 processor licenses that is driving long-term royalty growth.

"We are encouraged to see that the inherent operating leverage in the ARM business model, combined with sound financial discipline and the recent strengthening of the dollar against sterling, has given rise to earnings growth in 2008 of more than 20 percent."

Q4 operational highlights:

* Processor Division (PD): Strong licensing base driving royalty momentum.

* Base of licenses increased to 587 with 21 additional processor licenses signed in Q4.

* Three Cortex-A9 licenses to tier 1 semiconductor companies for mobile computing and gaming.

* Q4 mobile unit shipments grew approximately 35 percent to more than 750 million units.

* Q4 non-mobile unit shipments grew approximately 70 percent to 450 million units.

* Physical IP Division (PIPD): Licensing advanced technology nodes to IDMs and foundries.

* Twelve companies licensed physical IP in Q4, seven at advanced nodes, including 32nm.

* Backlog grew more than 5 percent sequentially, while PIPD license revenue declined 6 percent quarter-on-quarter.