Contrasting fortunes for two technology companies reporting results this morning, Arm and Misys.
Chip designer Arm, whose shares have suffered following a boost last week when it announced an increased tie-up with Microsoft, are down another 2% - a 6.6p decline to 339.5p - despite beating expectations with a 167% rise in second quarter profits to £43.5m. Some of this growth was due to a catch up royalty payment from shipments made between 2007 and 2010. The company said demand was growing for smartphones and other consumer products, but analysts were cautious about the company's current valuation. Investec issued a hold recommendation, saying:
ARM has announced a solid second quarter 2010 performance - in line with, or ahead of, our expectations at most levels. We make very modest upgrades to our full-year estimates, and highlight the fact that the major recent announcements (Microsoft and TSMC) will mainly affect earnings beyond our forecast period. The group's delivery of these two deals allows us to upgrade our target price from 290p to 340p, but the strong recent share price dictates we maintain our hold stance.
Panmure Gordon went further, confirming the sell recommendation it first issued yesterday:
This is another strong set of results and could help drive continued momentum in the stock, which currently can do no wrong. However, we continue to believe that the long term prospects for Arm are more than valued in at current levels, so retain our sell recommendation.
But Misys has climbed 10.6p to 260.8p. The company confirmed it would return around $1bn to shareholders following the sale of the bulk of its stake in its Allscripts-Misys medical business, which leaves it concentrating on its financial business. Allscripts is merging with rival Eclipsys, and Misys is placing 25m Allscripts shares - down from the originally planned 36m. This will see its stake cut from 55% to aorund 13% of the enlarged group.
Meanwhile its full year figures saw a 26% rise in operating profits with revenues up 13%.
