ARM price seems to be going through a three month flattish period after a 1 year or so steady rise. Any views on what might happen next?

ARM HOLDINGS BROKER VIEWS

Date Broker Recommendation Price Old target price New target price Notes
22 Jul Credit Suisse Outperform 877.00 1,125.00 1,125.00 Reiterates
22 Jul Investec Buy 877.00 1,100.00 1,100.00 Reiterates
22 Jul Finncap Buy 877.00 1,000.00 1,000.00 Reiterates

Good reasons to grab ARM Holdings
By Lee Wild | Tue, 22nd July 2014 - 12:04

Good reasons to grab ARM Holdings In a rollercoaster year, chip designer ARM Holdings (ARM) is currently on a dip. Its share price is down over a quarter so far in 2014 amid rising costs and dwindling growth in royalty revenue. But after a decent second-quarter, investors have chased the shares up 5% to 871p and there are good reasons why others should follow suit.
Revenue rose 17% in dollar terms during the three months ended June to almost $310 million (£181.59 million), and sterling sales climbed 9% to £187 million. Steady operating margin at 48.9% meant underlying pre-tax profit grew 9% to £94.2 million.

Licence revenue rocketed 42% during the quarter to almost $126 million, easily beating City forecasts. And a sequential drop in the order backlog is expected to reverse when big contracts come through during the third quarter.

Yet despite shipping 2.7 billion ARM processor-based chips - up 11% on last year - average royalty per chip fell from five cents to 4.6 cents. That's because sales of low-cost ARM-based microcontrollers and smartcards grew faster than more lucrative chips into smartphones and tablets. Electronics operators selling off older 3G handsets ahead of switching subsidies to 4G handsets also explains the meagre 2% increase in dollar processor royalties to $121.2 million.

However, the company still expects to outperform the overall semiconductor industry in the second half of 2014 "as more chips are sold to OEMs building more advanced devices, which typically utilise more ARM technology."

"The 41 processor licences signed in the second quarter were driven by demand for ARM technology in smart mobile devices, consumer electronics and embedded computing chips for the Internet of Things, and include further licences for ARMv8-A and Mali processor technology," says chief executive Simon Segars.

Analysts at Investec Securities expect to halve forecasts for second-half growth in royalty revenue to a more modest 15%, although there could be a surprise toward the end of the year "once the 4G phone cycle takes hold."

Strip out over £1 billion of net cash, worth 76p per share, and ARM shares trade on less than 28 times Investec's earnings per share forecasts for 2015 of 28.7p. That drops to less than 23 times for the year after, below the historic average. Persistent takeover rumours spice up the investment case.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

3rd Quarter Results

Progress on key growth drivers in Q3
· Growth in adoption of ARM® technology
o 43 processor licences signed across our target markets of mobile computing, enterprise infrastructure, and embedded intelligent devices
· Advanced technology enables a higher royalty percentage per chip in mobile devices, consumer electronics and enterprise infrastructure markets. In Q3, ARM maintained its licensing momentum for future royalty growth:
o 7 ARMv8-A processor licences signed, including three more licences for next generation designs
o 4 Mali™ multimedia processor licences signed, including another display processor license
o 5 POP IP licences signed including 4 for Cortex-A53 processors
· Growth in shipments of chips based on ARM processor technology
o 3 billion ARM-based chips shipped, up 19% year-on-year
o Strong growth in shipments of microcontrollers and enterprise infrastructure chips



Outlook
ARM enters the final quarter of 2014 with a robust opportunity pipeline that points to both strong licence revenues in Q4 and a sequential increase in order backlog. With market data underpinning the short-term outlook for royalty revenues, we expect group dollar revenues for the fourth quarter to be in-line with market expectations of about $350 million.

ARM ..ARM Holdings, broken out of downward trend channel. Really need to give it a further 24 hours for confirmation.

ARM Holdings broker views

Date Broker Recommendation Price Old target price New target price Notes
05 Dec Berenberg Buy 946.50 1,350.00 1,350.00 Reiterates
04 Dec Credit Suisse Outperform 946.50 1,000.00 1,000.00 Reiterates
03 Dec RBC Capital Markets Outperform 946.50 1,030.00 1,030.00 Retains
24 Nov Exane BNP Paribas Outperform 946.50 - 1,100.00 Reiterates
20 Nov Citigroup Neutral 946.50 850.00 850.00 Reiterates

From The Guardian Today......

Elsewhere chip designer Arm has added 27p to 957p after positive comments from Barclays analysts. In a note on rival Imagination Technologies, down 1p at 229p, Barclays said:

We think Imagination’s valuation is now intrinsically overly expensive (36 times/24times 2015/2016 PE for 30% compound annual growth rate, but also relative to peer Arm, whose growth drivers are more certain and which trades at only 28 times/22 times 2015/2016 PE for high 20s% compound annual growth rate. We therefore reiterate our underweight rating on Imagination and reiterate our overweight on Arm.

Meanwhile Andrew Dunn at RBC Capital Markets issued an upbeat note after talking to the company about China:

We hosted an investor call with Arm on the China smartphone market which highlighted the importance of this region (now the single largest smartphone market), the ability of the local ecosystem to deliver latest generation Arm technology at attractive price points, the transition to LTE (driving more advanced Arm intellectual property) and the rising uptake of higher royalty rate Arm v8 IP in smartphones.

We believe the application of advanced Arm IP into the high unit growth mid and entry level smartphone segments will both create a virtuous upgrade cycle and also raise Arm’s average smartphone royalty rate from around 1.5% to 3-4% by 2018.

Rising adoption of Arm’s more advanced IP (including v8) serves to raise royalty rates. An upgrade from a feature phone to a low end smartphone equals a 4 times royalty increase while ongoing innovation and the trickle-down over time of advanced technology from high end to mid and entry level segments should help offset standard industry chip average selling price declines and keep [prices] flat within each segment. In addition, Arm’s Mali graphics IP has a particularly high penetration rate in China due we believe to its broad offering (from high to low end) and compatibility with Arm’s processor IP. This allows Arm to benefit from an additional 1% royalty rate. With 10% CAGR unit smartphone growth over the next 5 years but growth weighted to the lower end, we expect rising royalty rates combined with flat ASPs to enable Arm to grow smartphone royalty revenues at a healthy 20%.

FOURTH QUARTER AND FULL YEAR RESULTS 2014

Q4 2014 Financial Highlights
· Group revenues in US$ up 18% year-on-year (£ revenues up 19% year-on-year)
· Processor licensing revenue in US$ up 30% year-on-year
· Order backlog up about 5% sequentially
· Processor royalty revenue in US$ up 16% year-on-year (relevant industry revenues up 5% year-on-year1)
· Normalised PBT and EPS up 25% and 36% year-on-year respectively
· Record net cash generation of £122m
· Directors recommend final dividend increase of 25% to 4.5p giving full year 2014 dividend of 7.02p, up 23%

Progress on key growth drivers in Q4 2014
· Growth in adoption of ARM® processor technology
o 53 processor licences signed for a broad range of applications including smartphones and mobile computers, enterprise infrastructure and high performance computing, and microcontrollers and chips for sensor hubs
· Advanced technology enables a higher royalty percentage per chip in mobile devices, consumer electronics and enterprise infrastructure markets. In Q4, ARM maintained its licensing momentum for future royalty growth:
o 9 ARMv8-A processor licences signed, including an architecture licence for high performance computing
o 10 Mali™ multimedia processor licences signed, including one subscription license for the family of Mali graphics processors
o 5 POP IP licences signed, including three for Cortex-A53 processors on 28nm processes
· Growth in shipments of chips based on ARM processor technology
o 3.5 billion ARM-based chips shipped, up 20% year-on-year
o Strong growth in shipments of microcontrollers and chips for mobile devices

Outlook
2014 finished strongly, with a record number of licences being signed in Q4 which generated a particularly high revenue contribution in the quarter.

We expect licence revenue growth in full-year 2015 to be consistent with our medium-term guidance. Following the acceleration in royalty revenue growth in the second half of 2014, and with a wide range of OEMs introducing products based on the ARMv8-A architecture this year, the outlook for royalty revenues in 2015 is encouraging. With full year 2015 licence and royalty revenues both anticipated to be consistent with market expectations, we expect total Group dollar revenues to be in line. We anticipate that total Group dollar revenues for Q1 will be up about 10% year on year, based on strengthening royalty revenue growth, and our expectation of the profile of licence revenue through the year.

Simon Segars, Chief Executive Officer, said:
"In Q4 and throughout 2014 ARM has seen strong licence revenue growth, driven by market-leading semiconductor companies increasing their commitment to use ARM technology, and a broadening range of new customers choosing ARM technology for the first time. As expected, ARM's royalty revenue growth rate increased in the fourth quarter. As the ARM Partnership continues to gain share, and as chips based on ARMv8-A processors and Mali graphics IP start shipping in higher volumes, the outlook for royalty revenues in 2015 and beyond is encouraging.

"2015 will bring exciting opportunities and challenges as ARM invests in new products and technologies, and continues to establish itself in competitive new markets."

Take your pick :-

Kepler Cheuvreux Buy 1,075.00 - 1,200.00 Reiterates

Liberum Capital Sell 1,075.00 700.00 700.00 Reiterates

Beaufort Securities Buy 1,075.00 - - Retains

Citigroup Buy 1,075.00 1,200.00 1,200.00 Reiterates

Goldman Sachs Conviction Buy 1,075.00 1,500.00 1,500.00 Reiterates

JP Morgan Cazenove Neutral 1,075.00 750.00 900.00 Reiterates

Deutsche Bank Hold 1,075.00 900.00 1,080.00 Retains

1st Quarter Results

Q1 2015 Financial Summary
· Group revenues in US$ up 14% year-on-year (GBP revenues up 22%)
· Processor royalty revenue in US$ up 31% year-on-year (Underlying1 revenue up 26% year-on-year)
· Processor licensing revenue in US$ down 2% year-on-year
· Normalised PBT and EPS up 24% and 27% year-on-year respectively

Progress on key growth drivers in Q1 2015
· Growth in adoption of ARM® processor technology
o 30 processor licences signed for a broad range of applications from sensors to smartphones to servers
· Maintained momentum in licensing of advanced technology, underpinning future royalty revenue growth:
o 4 ARMv8-A processor licences signed, and an additional architecture licence for smart mobile devices
o 4 Mali™ multimedia processor licences signed, including another licence for Mali video technology
o 2 POP IP licences signed, including one for a Cortex-A53 processor implementation on a 28nm process
· Growth in shipments of chips based on ARM technology
o 3.8 billion ARM-based chips shipped up 31% year-on-year
o Strong year-on-year growth in shipments of microcontrollers and chips for mobile devices
o First physical IP royalty revenues from a leading edge FinFET manufacturing process

Outlook
ARM has made an encouraging start to 2015 with more leading companies choosing to deploy ARM technology in their products. Assuming that the macroeconomic backdrop remains supportive of consumer spending, we expect group dollar revenues for the full-year 2015 to be at least in line with current market expectations.

Relevant industry data for Q1 2015, being the shipment period for ARM's Q2 royalties, points to a sequential decrease in industry-wide revenues, broadly consistent with normal seasonality. In this context we expect group dollar revenues for the second quarter to be in line with current market expectations.

Morgan Stanley note today:
"Past the iPhone 6 upgrade cycle, we like the long duration of the revenue and earnings growth, in a context of slow global growth. Not all new ARM initiatives will move the needle but every 1% of extra revenue growth adds 80p to the DCF. We upgrade to OW.

Concerns around a slowdown of the smartphone market have created a buying opportunity for ARM. The stock is hardly up year to date, at the bottom of its 5 year PE trading range. ARM should report high royalty revenues (expected to reach 36% in 2Q15, a 2 year CAGR of 20%). Indeed, from such a high base, the royalty growth can be expected to decline from here as the positive impact from the strong iPhone upgrade cycle and v8 upgrade cycle fades out. But in this note we argue that even though growth is more like 15% for royalties, and 10% for the overall top line, the duration of the growth is longer than the market believes (or even tries to model), making ARM a good example of a compounding stock in tech and outside of tech.

Pricing of smartphone chips is stabilizing. As we pointed out in the past, ASP assumptions were too high thanks to our statistical pricing model, we believe that the upgrade cycle for 4G smartphones is helping chip prices stabilize. Combined with higher v8 royalty rate, consensus forecasts are now within reach while they had been too bullish for a couple of years.

We are not particularly bullish on new ARM markets. In our view, autos, servers, networking, and IoT are not comparable to smartphone growth. But adding 1% of top-line growth to our current forecasts add 80p to share price, due to the high operating leverage and compounding effect. Should ARM execute on raising royalty rates with newer versions of v8 in the FY18-20, that would add 220p to the share price through the power of compounding (1400p bull case). Growth potential is also coming from China with government initiatives driving demand (see p. 9). Where could we be wrong: In our view, potential risks lie in Intel gaining share, decrease in consumer appetite for smartphones or that ARM fails to raise royalty rates further.

Our PT increases from 980p to 1180p as we move to OW: ARM’s investment case is shifting, from peaks and troughs driven by product cycles, to more consistent, steady growth for the next decade. Our PT increases as we introduce slightly less deflation on chips for mobile based on our statistical model and slightly lower WACC (now 9.3% similar to ASML vs 10% before)."

YUM!

gla

i've got a few of these in my sipp
it tends to be a bit lumpy, but it's an excellent company and not a bad pick (i think) as a core holding

yep - i was in arm when comfortably below a squid - has done very well and has / should have more growing revenues for years to come - my main interest today was the bounce though :-)
good one for sipp but do take care imo emerging techs coming all the time

one could say the same about google and apple and microsoft
of course, it's also not beyond the realms of possibility that someone will want to take out ARM at some point

ARM
ARM sees no slowdown in take – up of newer designs in smartphones

Cfo says continues to expect licensing revenues to grow 5-10 percent a year over medium term
Cfo sees no reason why take-up of armv8 technology in smartphones will slow

===========

seems to be some selling on the news so perhaps now a reasonable entry point for this first class company

below is the answer to the sell-off, though my entry point earlier at 894.5 is currently good

BUZZ-ARM: hits 6 month low as underlying Q4 results miss
10 Feb 2016 - 09:03

* ARM falls 5.6 pct despite reporting a top-line Q4 revenue beat, with brokers citing a one-off payment inflating the figure
* Q4 revenues up 14 pct to $407.9 mln [nASN0000CK]
* UBS and Liberum both point to a $9 mln royalty catch-up payment inflating Q4 revenues - both see as a 2 pct miss rather than 2/3 pct beat on expectations
* Move wrong foots traders with the majority of brokers calling the stock up in pre-market
* Stock trading at its lowest level since August 2015
* Fourth top faller on Stoxx 600 < .STOXX> in decent volume (55 pct 30-day average traded in first hour on Wednesday)
* Co says its expects FY $ revenues to be in line with analysts' expectations, but UBS and Liberum both see consensus estimates falling

Interesting that ARM are happy to diversify into the auto industry where they see huge growth potential, taking up any slack in the waning smart phone market. Terrific company, imo.

exactly so ...... i hold in my sipp albeit at a thumping loss at the moment, and per above, also have a trading position which is looking very tasty at the moment

StockMarketWire.com
ARM Holdings posts normalised pre-tax profits of GBP137.5m for the first quarter to the end of March - 14% up on last time.

Pre-tax profits under IFRS rose by 8% to GBP112.0m.

Group revenues in US dollars increased by 14% to $398.0m and in sterling were up 22% at GBP276.4m.

Normalised operating expenses were £132.9 million in Q1 2016 compared to £123.9 million in Q4 2015 and £100.0 million in Q1 2015. Approximately £27m of the year-on-year increase in normalised operating expenses was due to ongoing investments in R&D and supporting business infrastructure, which included a 20% year-on-year increase in the headcount of the Group and an annual pay-rise. The remaining £6m is due to the impact of weaker sterling.

The change to effective exchange rates increased normalised operating expenses by £4m as a result of the translation of non-sterling costs into sterling; and a further £2 million relates to the revaluation of monetary items. Since over 95% of ARM's revenues are dollar denominated, the impact on operating expenses from a weaker sterling is more than offset by the increase in sterling revenue.

Possibly a safe haven with much of it's revenue coming in $ and order book US and Asia facing.

Reuters - Japan's SoftBank Group Corp (9984.T) has agreed to buy British chip designer ARM Holdings (ARM.L) for 24.3 billion pounds ($32 billion), in a deal that will retain the company's management and grow its workforce.

Arm, Britain's preeminent technology company, said the two boards had reached agreement on the terms of the deal, with SoftBank paying 1,700 pence in cash for each ARM share, representing a premium of around 43 percent.

Shareholders will also receive a dividend.

SoftBank said it intended to preserve the ARM organisation, including its headquarters in Cambridge in central England, its existing senior management team, brand and partnership-based business model.

It also pledged to at least double ARM's employee headcount in the UK and increase its headcount outside of the country over the next five years.