UPDATE 1-Chip designer ARM beats expectations on strong licensing
* Q2 pretax profit up 30 percent to 86.6 mln stg
* Licensing for processors and graphics beat expectations
* Shares up 2.3 pct
LONDON, July 24 (Reuters) - British chip designer ARM Holdings beat second-quarter expectations with a 30 percent rise in adjusted pretax profit, helped by demand for its latest processors and graphics technology.
In the first set of results since Simon Segars took over as chief executive from Warren East on July 1, the Cambridge-based company reported pretax profit of 86.6 million pounds ($133 million) on revenue up 26 percent to 171.2 million, both ahead of forecasts.
ARM has outpaced the wider semiconductor market for the past five years or so, helped by the dominance of its processor architecture in smartphones and tablet computers.
There have been some signs of softness at the top end of the smartphone market, marked by weaker than expected sales of Samsung's flagship Galaxy S4 smartphone. Apple , however, comfortably beat forecasts for iPhone sales on Tuesday.
Finance Director Tim Score on Wednesday said that he expects the smartphone market to remain strong, though the 50 percent-plus growth rates of recent years are easing down.
But ARM does not rely on the top end of the market, Score said. "All smartphones contain more ARM technology than less sophisticated phones and therefore generate higher royalties."
Shares in ARM reached a high of 11.11 pounds in May, exceeding the level they were trading at in the dot-com boom of 2000. They have since come off by about 20 percent, but were up 2.3 percent at 918.5 pence by 0733 GMT on Wednesday.
ARM said its partners signed 25 licences for its technology in the quarter, including five for its latest Cortex-A designs and seven for its Mali graphics technology.
Processor design licensing revenue rose 34 percent year on year to 56.9 million pounds, comfortably beating market expectations. Analysts at Liberum expected 18.7 percent growth.
The company has been increasing its share of the graphics processing market, and on Tuesday Samsung said it had selected Mali for its latest high-end processor, ousting rival Imagination Technologies.
Royalties from chips shipped by partners, such as Qualcomm and Texas Instruments, reported a quarter in arrears, rose 26 percent year-on-year to 77.7 million pounds, broadly in line with expectations.
ARM reiterated its guidance for full-year revenue to at least meet market expectations.
Score said he expects analyst consensus to rise after the second-quarter results, to about $1.09 billion for the year.
Analysts expected the company to report pretax profit of 82.5 million pounds on revenue of 165 million for the quarter, according to a company-supplied consensus.