March 05, 2012
Electronics IP Industry - Q4 2011
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Net Income for the Year
ARM Net Income in IFRS for the full year 2011 was 112.642 million pounds, up 31.02% year over year compared to 85.974 million pounds for the full year 2010.
ARM Net Income in IFRS for the full year 2011 was $180.227 million, up 35.24% year over year compared to $133.259 million for the full year 2010, with 2011 again benefitting by a +3.2% difference in fx rates in 2011 vs. 2010.
Outlook for Q1 2012
ARM enters 2012 with a robust opportunity pipeline for licensing and a record order backlog, helped by new product introductions and new markets. In addition, market share gains in long-term growth sectors look set to continue as ARM Partners introduce new chips based on ARM technology. Given industry analysts are forecasting that semiconductor revenues declined about 10% sequentially in Q4 and given ARM's very strong license revenues in Q4, ARM expects group dollar revenues for the first quarter to be in-line with current market expectations of around $200 million.
ARM’s stock price has, however, been oscillating in the high 20’s since reaching the most recent peak of $31.21 on November 04, 2011. ARM stock closed at $27.75 on February 17, 2012 and $27.42 on February 27, 2012, but ARM’s stock price has not eclipsed its closing price of November 04, 2011 since then.
Outlook for Full Year 2012
For full-year 2012, the global macro-economic situation remains uncertain and is likely to influence consumer and enterprise spending, thereby potentially impacting semiconductor revenues and industry confidence. Assuming the macroeconomic situation does not deteriorate significantly, ARM expects group dollar revenues for the full-year to be at least in line with current market expectations of just over $860 million.
As of December 31, 2011, ARM had 2,116 full-time employees, a net increase of 227 since the start of the year, with 80% being engineers joining ARM's R&D teams. At the end of Q4 2011, the group had 870 employees based in the UK, 555 in the US, 246 in Continental Europe, 306 in India and 139 in the Asia Pacific region.
Assuming an average of 2002.5 employees for the year 2011, ARM enjoyed some $392,970 in revenue per employee for 2011.
ARM Acquires Prolific, Inc.
On October 31, 2011, ARM purchased the entire share capital of
Prolific Inc. for $7.7 million in cash. This purchase has been accounted for as an acquisition. Prolific, a company based in Newark California, develops leading-edge IC design optimization software tools that significantly reduce development time and improve the performance of cell-based designs. The increasing complexity of 20nm and below process technologies is driving the need for automated layout optimization solutions. This acquisition augments ARM's strategy to provide innovative
physical IP products that will enable the ARM partnership to continue to lead in the implementation of highly integrated, low-power system-on-chip solutions.
For these reasons, combined with the ability to hire the workforce of Prolific, including the founders and the management team, the Group paid a premium for the company giving rise to goodwill. All intangible assets were recognized at their fair values, with the residual excess over net assets being recognized as goodwill. All of the goodwill recognised is expected to be deductible for income tax purposes.
The following table summarizes the consideration and provisional fair values of the assets acquired and liabilities assumed as at 1 November 2011.
The consideration was all paid in cash. All transaction expenses incurred by ARM have been charged to the income statement.
A further $8.5 million is payable as an earn-out to the shareholders subject to them remaining in employment with ARM for up to five years and meeting certain performance criteria.
From the date of acquisition to December 31, 2011, the acquisition contributed $0.1 million in revenue and incurred a loss of $0.1 million. If Prolific had been consolidated from January 1, 2011, the consolidated income statement would have included $3.1 million of revenue and $1.5 million of pre-tax profit.
Other ARM acquisitions during the year 2011 have been previously described in EDA WEEKLY articles.
ARM self description
ARM designs the technology that lays at the heart of advanced digital products, from wireless, networking and consumer entertainment solutions to imaging, automotive, security and storage devices. ARM's comprehensive product offering includes 32-bit RISC microprocessors, graphics processors, video engines, enabling software, cell libraries, embedded memories, high-speed connectivity products, peripherals and development tools. Combined with comprehensive design services, training, support and maintenance, and the company's broad Partner community, they provide a total system solution that offers a fast, reliable
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-- Russ Henke, EDACafe.com Contributing Editor.
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