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ARM profits fall due to patent litigation costs despite sales increase

One time hit masks impressive growth
Wed Jul 24 2013, 10:34
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CHIP DESIGNER ARM has posted a drop in profits to £15m for its second quarter citing litigation costs, despite posting a steep increase in revenues.

ARM's second quarter financials highlighted how the firm is riding high on the consumer electronics boom. The firm reported a 24 percent jump in revenues to £171.2m but took a hit in profits, with the modest figure of £15m being brought down by patent litigation costs.

ARM said it suffered a £41.8m legal cost, which the firm called "ARM's contribution to a full and final settlement of certain patent related litigation". ARM didn't say what firm(s) it was fighting and paid off.

ARM's chip designs already power most handheld consumer electronics devices and the firm is about to see its chips enter the lucrative server market. The firm's second quarter results were the first since Warren East handed the company reins over to Simon Segars.

ARM CEO Segars said, "ARM has delivered another quarter of strong revenue and normalised earnings growth. We continue to see demand for ARM's next generation technology, and in Q2 we signed five licenses for Cortex-A series processors, and seven licenses for ARM's Mali graphics processor, demonstrating our leadership in both low-power processor and 3D graphics technology.

"During the quarter, our partners announced exciting new design wins as ARM-based chips were selected for high-volume OEM products. These included many new smartphones and tablets, ARM-based 64-bit servers and mobile base stations."

Aside from ARM's one-time patent expense, the firm is generally bucking the semiconductor industry trend and seeing its business grow while other chip firms such as Intel suffer. Given that 2014 should see its licensees enter a new market, there seems to be broad scope for ARM to continue its revenue and profit growth in the near and middle term. µ


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