Ahead of Apple's expected launch of its iPad mini, one of its key suppliers has jumped sharply following better than expected results.
Cambridge-based Arm has added 28p to 622.5p after a 22% rise in third quarter profits to £68.1m and an 18% rise in revenues to £144.6m. The company said its royalty revenues had benefited from it gaining business in digital TVs and microcontrollers, and it had also seen good performances in its smartphone and tablet business (it supplies the likes of Samsung as well as Apple.) Chief executive Warren East said:
As we move into an ever more connected world of mobile computing, cloud-based networks and the internet-of-things, Arm is seeing increased demand for its high performance and low power technology.
This demand is helping to drive Arm's licensing revenues and this quarter we saw market leaders license Arm's advanced processor technology for next generation super smartphones, tablets and mobile and embedded computing applications.
He said the company had gone into the fourth quarter with a record order book - it has signed five licenses for its Mali graphics chip with three of the customers new ones for the product - and he expected revenues to be in line with current expectations, despite the overall gloomy global economic picture:
Data from our customers suggests a modest sequential increase in Arm's royalty revenue in the fourth quarter.
The company said it was always on the lookout for strategic opportunities and had committed £104.5m towards a possible investment. If the deal does not happen, the money will be returned to Arm. Julian Yates at Investec said:
The 2012 outlook is in line with consensus but we would see modest upside risk. We see Arm as the stand-out tech play, and maintain our buy rating.
Another UK technology business, CSR, has also pleased investors, saying it will pay them $285m before the end of the year, the proceeds of the sale of its handset technology to Samsung. Third quarter operating profits rose from $24.3m to $32.2m, and its shares have climbed 13.2p to 351.9p, the biggest riser in the FTSE 250 index. Lorne Daniel at FinnCap said:
On the back of these results we are moving from our recommendation from hold to buy, with a 400p target price.
