Chip designer ARM Holdings rose strongly on Tuesday morning after strong growth in licensing revenues helped the group beat forecasts in the fourth quarter and full-year. The firm also offered a relatively positive outlook for the full year 2012.

Fourth quarter sales totalled £137.8m, up from £113.9m the year before and well ahead of the £127m expected by Bloomberg consensus, as the group sold 2.2bn of its ARM technology-based chips, the highest-ever number of ARM-processor based shipments. ARM provides the intellectual property behind popular gadgets such as Apple's iPhones and iPads.

"In Q4 and throughout 2011 ARM has seen strong licensing growth, driven by market-leading semiconductor companies increasing their commitment to ARM technology, and more new customers choosing ARM technology for the first time," according to Chief Executive Officer Warren East.

Full-year revenues rose 21% from £406.6m to £491.8m in the 12 months ended December 31st, compared to Nomura's forecast of £475m. Meanwhile, pre-tax profits jumped 37% from £167.4m to £229.7m, under Nomura's £215m estimate. Earnings per share rose from 9.34p to 12.45p.

The full-year gross margin, excluding share-based payments costs of £3.5m, improved from 94.3% to 95.1% in 2011.

The board has recommended a final dividend of 2.09p per share, up 20% on the year before. This gives a total dividend of 3.48p, also an increase of 20%.

"Given industry analysts are forecasting that semiconductor revenues declined about 10% sequentially in Q4 and given ARM's very strong license revenues in Q4, we expect group dollar revenues for the first quarter to be in-line with current market expectations of around $200m," the group said.

The firm adds however that, "assuming the macroeconomic situation does not deteriorate significantly, we expect group dollar revenues for the full-year to be at least in line with current market expectations of just over $860m."

Nomura was pleased with the group's results today, saying that the group reported a "very solid set of numbers" this morning. However, the broker believes that the outlook still remains uncertain: "Management is typically conservative with guidance, but this time concerns around the macro-environment and industry confidence seem higher to us."

Shares had risen 6.69% to 637.5p in morning trade.

BC

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