ARM warns of flat sales as profits collapse

The chip designer ARM Holdings yesterday warned there was still no sign of any let-up in the tough market conditions that caused its October profit warning as it reported a 60 per cent drop in profits for the last quarter of 2002.

The Cambridge-based company said it expected revenues to remain "flattish" for the foreseeable future with revenues in the current quarter at the lower end of the £29m to £36m range.

But shares in ARM closed up 2.2 per cent, or 1p, at 46.5p after the company unveiled fourth-quarter figures that were in line with market expectations.

In the three months to 31 December, ARM recorded a pre-tax profit of £5.5m, down from £8m in the third quarter and well beneath the £13.8m profit seen in the same quarter a year before.

Sales in the period were £32.3m, down from the £33.3m reported in the third quarter and a 20 per cent fall from the £40.2m seen in the fourth quarter of 2001.

ARM has been hit by the effect of its customers taking longer to sign deals to licence its technology.

Warren East, its chief executive, said yesterday that remained the case. "If I were signing the purchase orders off on the other side of the table, then I would want to have seen a couple of quarters of solid performance from the semiconductor industry.