ARMH Arm Holdings Plc ADS Each Representing 3 Ordinary Shares (MM)

By Rory Gallivan 

LONDON-- ARM Holdings PLC, a computer-chip designer that creates technology found in Apple Inc.'s iPhones, on Wednesday reported a rise in third-quarter revenue and profit, boosted by demand for a new chip used in smartphones and digital TVs.

The company, based in Cambridge, England, reported revenue of GBP243.1 million ($371.6 million) for the quarter ended September 30, up from GBP195.5 million the previous year. Net profit rose to GBP85.9 million from GBP64.8 million.

Shares rose as much as 9% in early trading in London.

ARM said 3.6 billion of its chips were shipped during the period, up 20% from the same period the previous year.

The company said it expects group dollar revenue for the full-year to be in line with market expectations.

Chief Executive Simon Segars said ARM has benefited from the growing use of a new chip that is used in smartphones, digital televisions and other products and that commands higher royalties than other chips. ARM chips are being used in an increasingly diverse range of devices, including energy efficient smartphones and computer servers, he said.

ARM is also benefiting from the growth of the "Internet of Things," or IoT, a term used to describe everyday objects including speakers and cookers that are being connected to the Internet. ARM-designed chips are being used in IoT applications like connected sensors used to monitor traffic and for the timely watering of crops, Chief Executive Simon Segars told The Wall Street Journal.

The company has posted continuing strong sales of chips used in smartphones Mr. Segars said, but declined to mention specific devices. Analysts at Barclays said they believe ARM results were boosted by having its technology included in a new line of Samsung Galaxy S6 smartphones.

ARM receives royalty fees from every sale of a device containing its chips and from licensing its technology to its customers.

Numis analyst Nick James said told The Wall Street Journal that while the overall results were broadly in line with expectations, the market was pleased by the strong 37% rise in royalty revenue, which had been an area of concern among some analysts, offsetting weaker licensing revenue. Analysts tend to focus on royalties because licensing revenue varies from quarter to quarter due to the timing of deals.

"Licensing (revenue) is always lumpy...our guidance in the medium term is unchanged," Mr. Segars said.

ARM's technology is used in 95% of smartphones, 80% of digital cameras, and 35% of all electronic devices, according to its website.

Write to Rory Gallivan at rory.gallivan@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

October 21, 2015 07:50 ET (11:50 GMT)

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