ARM bucks market trend

July 23, 2001 Posted: 0748 GMT

LONDON (CNN) -- ARM Holdings, Europe's biggest chip designer, said second-quarter profit rose 23 percent from the sale of licences to use its technology.

Second-quarter net profit rose to £8.25 million ($11.8 million), or 0.8 pence a share. That compares to a profit of £6.7 million, or 0.7pence, in the year earlier period. Sales rose 56 percent to £36 million.

The Cambridge-based company, which earns money from licensing designs and royalties for the use of semiconductors in mobile phones, handheld computers and cars, has seen its stock fall more than 56 percent this year.

ARM has fallen victim to tumbling global equity markets and a raft of profit warnings from chip makers, such as STMicroelectronics, and Infineon Technologies, as a U.S. economic slowdown cripples European and Asian growth.

"The semiconductor industry has seen one of its sharpest downturns in its history,"  Chief Executive Robin Saxby said.

"We experienced a decline in royalty revenues in the second quarter. However, this has been offset by higher sales from licensing, consulting services and development systems resulting in continued growth in overall revenues for the quarter,"  Saxby added.

On a pretax level, ARM (ARM) posted a 46 percent jump to £12.2 million in the three months to June 30. That beat market consensus forecasts for pretax profit of £11.6 million, according to a poll of analysts by Reuters.

Chief Financial Officer Jonathan Brooks said: "With the forward visibility we get from licensing business model, we remain confident about the outlook for our business for the remainder of the year."

ARM's stock soared almost 7 percent to 214.75 pence as the London Stock Exchange opened in negative territory, along with other European bourses.

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