Commentary: Electronics IP Industry — A May 2006 Update


As shown in Table 2 below, in Q1 2006 the combined earnings of the G7 were $21 million. Only ARM, MIPS, Rambus and Virage Logic reported profit in the quarter. Combined earnings decreased some 4% year-over-year and a significant 30% from the just prior quarter. Combined earnings were ~10% of revenue. ARM, Virage Logic and MoSys had year-over-year increases in earnings. On a sequential basis Rambus' earnings declined 80% while Arm's earnings declined almost 7%. LogicVision, MoSys and Virage Logic had increases.

Company
Last
QTR
Revenue
Prev
QTR
Revenue
Last
vs.
Prev QTR
Comparable
2005
QTR
Last QTR
vs.
Comparable
QTR
ARM £ 11,960 12,977 (1,017) 9,079 2,881
ARM $ 20,930 22,450 (1,520) 17,069 3,861
Ceva (801) (147) (654) 627 (1,428)
LogicVision (2,248) (2,488) 240 (1,812) (436)
MIPS 2,225 2,403 (178) 4,006 (1,781)
MoSys (974) (1,128) 154 (1,369) 395
Rambus 1,817 9,381 (7,564) 4,440 (2,623)
Virage Logic 176 (242) 418 (988) 1,164
Total 21,125 30,229 (9,104) 21,973 (848)
Table 2 Quarterly Earnings of the Group-of-7 (G7) IP Providers
(US$000)


Q1 2006 Results of Individual Electronics IP Providers:


On April 19, 2006 ARM Holdings plc announced the results for their first quarter, the period ended March 31, 2006. Total revenue for the quarter was £64.6 million

Licensing revenue in the quarter was £25.2 million, accounting for 39% of total revenue. This was an increase of 2% year over year, but a decrease of nearly 2% sequentially. Royalty revenue was £28.1 million, accounting for 43% of total revenue. This was an increase of 34% year-over-year, and an 11% increase sequentially. Development systems at £7.9 million accounted for 12% of total revenue, and services at £3.4 million accounted for just over 5% of total revenue. Table 3 shows the reveue splits in US dollars.

ARM
$US
1Q06
4Q05
Delta
1Q05
Delta
License 43.7 44.5 -1.7% 46.2 -5.4%
Royalties 49.3 43.8 12.6% 39.4 25.1%
Dev Sys 13.9 13.5 3.0% 11.0 26.4%
Services 6.0 7.1 -15.4% 6.6 -9.1%
Total 112.9 109.0 3.6% 103.2 9.4%
Table 3 ARM Financial Data in US Dollars

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