ARM Holdings Share Discussion Threads

[steptoes yard] 03/6/2016 19:43

so was my pointing you in the direction of seeking alpha not useful to you?

[gengulphus] 03/6/2016 18:10

No, it's that if you don't have anything useful to say, don't say anything.

Gengulphus

[steptoes yard] 02/6/2016 19:56

I guess the final arbiter is if you are not sure don't invest

[gengulphus] 02/6/2016 17:18

Thanks - though you could have given me less of a needles-in-a-haystack search to do! The 'haystack' being the large volume of material on Seeking Alpha about ARM, the 'needles' being specific information about the existing split by value (not number of processors shipped) between areas the company expects to be higher- and lower-growth (not which areas it expects to have what sort of growth - I already had a good idea of that from the annual report, including the fact that they expect mobile to be lower-growth).

I've found one 'needle' so far - in the February 10th Seeking Alpha transcript , Simon Segars says:

"To be honest, I don't keep that number in my head. We looked at the split of the volume of our base chips and there is the table in there, it's about 45% of the volume is mobile. I think again we can maybe follow-up with the team here, it's about 60% plus of the dollars come out of mobile. ..."

That's clearly not highly authoritative, as he was working from memory that he knew to be imperfect - e.g. the shipments percentage in the annual report is 44% rather than the 45% he remembered. But it's enough to tell me that the revenues per mobile processor average about twice those per non-mobile processor - e.g. if 44 mobile processors averaged 10c revenues each and 56 non-mobile processors 5c each, then mobile would be 44% (44 out of 100) by processor count and 61% ($4.40 out of $7.20) by revenues.

And that gives a better basis for estimating how much the mobile 'slowdown' will impact the overall company growth - 'slowdown' in quotes because it's not actually a slowdown, just less acceleration, just as a car that takes 10 seconds to accelerate to 60 mph and then a further 10 seconds to get up to 75 mph isn't actually slowing down in the second 10 seconds! Still not a very good idea how important iPhones are to ARM, though: smartphones are only part of the mobile market, and iPhones only part of the smartphone market, and in each case I'd expect the revenue split to be different from the number-of-processors split.

One amusing triviality that I noticed in the transcript: a questioner apparently talked about ARM having "a never increasing pile of cash". It's pretty obvious what he actually said - but strange how such a tiny typo completely reversed the meaning of the words!

Gengulphus

[steptoes yard] 02/6/2016 12:53

....Analyst calls following preliminary epresults where Simon Segars and Co describes where margin growth exists

[steptoes yard] 02/6/2016 12:52

Check out the detailed analysis on seeking alpha. I'm not allowed to post it here so peeps will have to read it themselves. It includes the transcripts from the

[gengulphus] 02/6/2016 11:44

Yes - but they don't tell us how important each market is to their revenues and earnings.

For example, slide 16 of the Q1 2016 roadshow slides tells us that in the 'Mobile Application Processors' market in 2015, ARM had an 85% market share and the Total Available Market was $18b. Does that mean that ARM had 85% * $18b = $15.3b revenues from that market? No way - the 2015 accounts in tell us that their total revenues were only about 1/10th of that amount!

And the reason for that is simple: it's their semiconductor partners who actually make and sell the processors who (between them) have that $15.3b of revenues from selling ARM mobile application processors. They pay some proportion of that to ARM in the form of license fees and royalties - but what proportion? We know it has to be quite a small proportion: note 2 in the accounts indicates that ARM's total revenues from license fees and royalties for 2015 were £787.7m, or very roughly $1.2b, so it's got to be less than 8% of the total $15.3b. But that £787.7b is for all types of processor, not just mobile application processors, so it must be substantially less than 8% - and again the question "How much less?" becomes important...

And even if one could find the more specific revenue figure for mobile application processors, that still doesn't tell us what proportion of that revenue is from iPhone application processors rather than those for other mobiles...

So basically, I haven't found enough data in what ARM has said to allow me to produce more than a very rough idea of how important iPhone sales are to ARM. That rough idea is "high single-digit percentage of revenues, i.e. 5-10% of them" - important but not critical to ARM's continued success. Not anything I would guarantee, though - just where various figures based on guesses and estimates I've tried have tended to cluster.

By the way, I'm not in the least surprised that I cannot find enough data to pin down figures as specific as the percentage of revenues due to iPhone sales. That's because companies tend to regard figures that specific about their business operations as commercial secrets.

Gengulphus

[steptoes yard] 02/6/2016 07:51

Their accounts and roadshow slides on their website records what their share is of each market

[gengulphus] 02/6/2016 07:28

ARM needs a new story. In the past few years it developed a tag as the 'designer of chips for the iPhone' which is no longer applicable as iPhone sales have peaked.

I don't think that's a story that ARM have developed - rather, it's a story that those watching ARM have developed. Especially financial journalists, for whom the easy way to describe a company like ARM is to talk about the product using their processors that is most in the public eye, and the sort of investor that watches financial journalism rather than digging into the company's finances for itself.

If one does the latter, for e.g. the 2015 annual report, it is clear that processors for iPhones cannot make up all that big a percentage of ARM's revenues. If one looks at , the annual sales of iPhones appear to currently be in the region of 200-250 million. A big number, but ARM's royalties were earned on 14.8 billion processors shipped in 2015 - so processors for iPhones made up only something in the region of 1.5% of the total.

I would of course expect the royalty on an iPhone processor to be higher than average, so the percentage of royalty income (rather than of the number of processors shipped) due to iPhones will almost certainly be higher than that 1.5%. But based on various other figures in the annual report and background knowledge of other smartphones, etc, I would find it hard to believe that the percentage of ARM's revenues that are due to iPhones is into double digits.

As for what ARM's story is, as opposed to the most focused-on story of ARM-observers, what I've seen in at least the last few years of ARM's annual reports is that their story is much more broadly-based than on just mobile phones, let alone just iPhones. If they need a new story, it's because that story isn't sinking in with the financial journalists and some investors - not because a story they haven't put forward (*) is running out of steam.

(*) Or if they have put it forward, they've made a very poor job of it - a PDF search says that there is not a single mention of iPhones in their 2015 annual report!

Gengulphus

[retailronnie] 01/6/2016 06:33

Cavium arms ARM bodies for fresh data centre compute charge

Does new 14nm ThunderX2 pack enough punch to take on Chipzilla?



"2017 could be shaping up to be a real battleground for compute."

[philanderer] 23/5/2016 14:21

Looking up today. 😀

[togglebrush] 20/5/2016 08:38

Press
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'
Heading
Arm buys imaging specialist Apical as it eyes ‘internet of things’

[thomasthetank1] 19/5/2016 17:53

Read Beaufort Securities's note on ARM HOLDINGS PLC (ARM), out this morning, by visiting hxxps://www.research-tree.com/company/GB0000595859

"The acquisition of Apical is a positive development for ARM Holdings. Apical is one of the fastest growing technology companies in the UK, with its advanced imaging products used in more than 1.5 billion smartphones and around 300 million other consumer devices including IP cameras, digital stills cameras and tablets. The acquisition is expected to boost ARM Holdings' entry into new markets such as connected vehicles, robotics, smart cities, security systems, industrial applications and Internet of Things devices. ARM Holdings reported robust results for Q1 2016, with improved revenues and margins. The company's licensing pipeline for the remaining year looks strong, with leading companies vying to license the ARM technology for their next-generation products. We expect the ARMv8-A technology to continue penetrating the mobile and enterprise markets, and the high royalty rate earned on these products is expected to underpin future royalty revenues. Thus, considering the strong demand for the company's next-generation products, we expect it to explore new opportunities and create new revenue streams..."

[philanderer] 19/5/2016 11:54

19 May 16 Barclays Overweight tp 1250p
19 May 16 Beaufort Secs Buy -

reiterations

[philanderer] 18/5/2016 23:59

ARM wants to provide technology that will allow your oven, heating and TV to connect with your phone

Read more:

[the grumpy old men] 18/5/2016 19:07

ARM's $350 Million Deal Builds Future Beyond Smartphones
18/05/2016 3:10pm
Dow Jones News

ARM Holdings (LSE:ARM)
Intraday Stock Chart

Today : Wednesday 18 May 2016
Click Here for more ARM Holdings Charts.

LONDON—ARM Holdings PLC, the England-based tech firm that designs most of the world's smartphone chips, said Wednesday that it completed a $350 million acquisition of a computer-vision company, in a bet that it can further ARM's goal of getting its technology into new markets such as automobiles, robots and everyday household items.

ARM acquired Apical Ltd., a U.K.-based company that develops camera technology that lets electronic devices learn from their environments. For example, its technology can help a security camera distinguish between a human and cat.

Founded in 2002, Apical employs 100 people. The deal closed on Tuesday.

ARM doesn't manufacture chips itself but designs the blueprint of the microprocessors found in more than 95% of the world's smartphones. The company charges smartphone makers such as Apple Inc. and Samsung Electronics Co. an upfront licensing fee and royalties on the volume of smartphones shipped.

As the growth in global smartphone shipments slows—ARM expects an annual increase of 6% to 7% for the next five years—the company has diversified. It designs the No. 1 smartphone graphics chip and has steadily increased its share in the networking market, designing chips for base stations and Wi-Fi routers, for example. ARM is also in the early stages of designing chips for giant computer servers, in a challenge to industry leader Intel Corp.

ARM sees one of its biggest opportunities in what the tech industry refers to as the " Internet of Things," which involves connecting to the Internet everyday items such as automobiles and even household items such as lightbulbs.

All these objects will require chips, some of them very tiny, that can process information and send the data online. ARM wants to design the blueprint of these chips and, just as it does with its smartphone business, charge an upfront licensing fee and earn royalties every time someone purchases an item with an ARM-designed chip.

That is how Apical can help, said Mike Muller, ARM's chief technology officer. Apical has a similar business model to ARM: It doesn't manufacture anything itself but designs the blueprint for hardware that helps devices with displays or cameras be more efficient. Now ARM can use Apical's expertise to help it design better microprocessors and chips, and ARM can now also sell Apical's current designs alongside ARM's offerings.

"The acquisition makes sense strategically," said Jefferies analyst Robert Lamb. He said in the short term, ARM's smartphone business can benefit from Apical, which designs a tiny piece of hardware that helps displays adapt to changes in ambient light in an energy-efficient way. And in the long term, Apical's computer-vision technology can help ARM get its technology into Internet of Things devices with displays or cameras.

Imagine a home-security camera connected to the Internet, Mr. Muller said. It can automatically transmit live video to the homeowner whenever it detects motion, but that would take up a lot of power and bandwidth. Mr. Muller said with both Apical's software and hardware, which is a tiny block of silicon inserted into an ARM-designed microprocessor, the camera can learn to ignore pets and transmit video only when it detects a human.

Based in Cambridge, England, ARM is regarded as one of the U.K.'s top tech firms. Employing about 4,000 workers world-wide, it reported revenue of $1.5 billion for 2015, up 15% from 2014.

Write to Stu Woo at [e-mail]



(END) Dow Jones Newswires

May 18, 2016 10:55 ET (14:55 GMT)

[philanderer] 18/5/2016 17:17

IC TIP UPDATES:

Arm (ARM) has shelled out $350m (£243m) to acquire Apical, a computer vision company that, similar to the microchip titan, licenses out its technology then collects royalties when it’s deployed in devices. Management expects the deal to accelerate Arm’s growth in explosive markets such as internet-connected cars and robotics.

Buy.

[philanderer] 18/5/2016 14:02

Super long time bears Liberum who have a 'sell' and 650p target

LOL....

analysts at Liberum weren't convinced by the purchase, as they believe the FTSE 100-listed computer chip maker has paid a "very high price".

[l.parker] 18/5/2016 09:07

Makes sense, a system that that can guide your health, more power to your elbow.

[philanderer] 18/5/2016 09:00

Way to go :-)

[retailronnie] 18/5/2016 07:36

Saw this article yesterday which may explain why arm bought Apical - Internet of Eyes to compliment Internet of Things?

[philanderer] 17/5/2016 18:20

'ARM Holdings Share Price: ARM Holdings Greatly Benefits from Intel’s Retreat from Mobile Processors'