Arm recovers after initial dip

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Arm Holdings, the UK-based designer of microchip components, on Tuesday reported turnover for the third quarter of £64.8m, up from £56.7m a year ago but below analysts’ forecasts of about £66.7m.

Shares in the group intially fell 3p to 106p but recovered in afternoon trading to stand more than 6 per cent higher higher at 116p after Arm moved to reassure investors over future sales.

Cambridge-based Arm designs and licenses the microprocessors which control the chips used in mobile phones, iPods, gaming devices and high-definition televisions.

Pre-tax profits for the three months to September 30, were £12.6m (£12m) under US GAAP accounting rules, as earnings per share dipped to 0.67p (0.68p).

Arm also reported so-called “normalised” pre-tax profit of £21.2m (£19.1m) and earnings per share of 1.12p (1.05p). These numbers strip out acquisition-related charges and other share-based remuneration charges.

One-off revenue from new licenses grew by 8 per cent to £27.9m (£25.9m), representing 43 per cent of group turnover.

Royalty revenues, which are recurring income from existing clients, grew 23 per cent to £26.2m, or about 40 per cent of group turnover.

Sales of development services were £6.5m (£5.8m).

The company bought back 18.5m shares at the cost of £21.5m during the third quarter, taking its total return to shareholders over six months to £43m.

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