Tag Archives: Warren East

Business, Finance, Occupation & Industry

Should I Buy ARM Holdings?

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By Harvey Jones, The Motley Fool

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LONDON — It’s time to go shopping for shares again, but where to start? There are loads of great stocks to choose from, and I’ve got my wallet out. Can ARM Holdings  continue to bag amazing returns?

Entry point
The relentless march of the ARM Holdings share price has been reversed in recent weeks. Not by much, I’m afraid, but sufficient for me to ask, “Should I Buy ARM Holdings?”

If you had bought this Cambridge-based microchip maker a decade or so ago, you would have a 20-bagger on your hands today. That means ARM Holdings isn’t cheap, but this is a stock that has been rewriting the rules on valuation. I decided it was too expensive five years ago, but it’s up 949% since then. I also snubbed it three years ago; since then it’s up 287%.

Micro chips, macro profits
Its explosive growth continues apace. Revenue grew 17% in 2012 to 577 million pounds, including a 21% leap in the fourth quarter. Pre-tax profits rose 20% to 276.5 million pounds. ARM‘s processor royalty outperformed the semiconductor market average by nearly 20%. Its processors are used as the main central processing unit in a host of mobiles and handheld devices, with Apple, Nintendo, Nokia, Samsung and Sony Ericsson among its customers. ARM signed licenses for 36 processors in the fourth quarter alone, which will shortly appear in a smartphone or mobile computers near you, as well as medical devices and microcontrollers.

ARM‘s share price rose 60% in the past six months alone. That share price slip I mentioned? A small drop of 5.5% since hitting its 52-week high of 9.71  poundsin early March. Today, you can buy it for 9.18 pounds. That’s hardly the buying opportunity of a lifetime, but be grateful for small blessings.

Cheap as chips? Not likely.
The question every investor asks is whether the success story can continue. Trading at more than 60 times earnings, four times more than traditional fair value, there is scope for plenty of downside. It operates in a competitive fast-moving market, with rivals such as Intel targeting its core market of smartphones and tablets. One slip could send the share price spiralling. As could any further slippage from its most high-profile customer, Apple. The imminent departure of long-serving chief executive Warren East briefly unsettled investors, although his internal replacement, ARM president Simon Segars, has cheered them up by vowing to retain the company’s independence.

Brokers still admire this microchip marvel. Bank of America has just confirmed its “buy” rating after claiming the earnings potential of ARM‘s big.LITTLE Processing energy-saving technology had been “underappreciated,” and will increasingly spread from top-end phones to the cheaper end of the market. Like me, the broker has been tempted by recent share price slip.

Mind games
You won’t be surprised to see that income has been trampled in the dash for growth. ARM yields just 0.5%, covered 3.3 times, despite management hiking the dividend 29% to 4.5 pence a share in 2012 (it …read more
Source: FULL ARTICLE at DailyFinance

Computers

ARM appoints Segars as CEO after Warren East retires

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Simon Segars will become ARM CEO when Warren East retires July 1, the company said Tuesday.

Segars is currently ARM‘s president. As CEO, he will take charge of a fast-growing company whose processor designs are used in most tablets and smartphones from companies like Apple and Samsung.

Simon Segars

East, 52, is a well-respected leader, credited with pushing ARM out of obscurity into the forefront of mobile devices. Segars, who joined ARM in 1991, will take over a company in the midst of expanding its presence in areas such as embedded devices, taking market share away from another chip designer MIPS.

ARM is also forging ahead into new markets such as servers, which is dominated by x86 chips from Intel and Advanced Micro Devices. AMD has adopted ARM processors and plans to put them in servers, and Dell and Hewlett-Packard are offering prototype ARM servers for testing.

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Source: FULL ARTICLE at PCWorld

Business, Finance, Occupation & Industry

Boss of ARM Holdings to Retire in July

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By Maynard Paton, The Motley Fool

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LONDON — The shares of ARM Holdings have slipped 3.3% to 890 pence as of 8 a.m. EDT after the microchip designer revealed that its chief executive is to retire later this year. The FTSE 100 member said Warren East, who joined the company in 1994, will retire on July 1. He will be replaced by Simon Segars, who is currently the president of ARM.

East said:

It has been a privilege to lead ARM during such a momentous and exciting time for our industry and I am proud of what the ARM team of employees and partners has achieved together while I have been CEO. … ARM is a great company with a strong market position and a unique culture. We take a very long-term view about our business, and we believe that now is the right time to bring in new leadership, to execute on the next phase of growth and to plan even further into the future.

Segars commented:

I am honoured to have been appointed to succeed Warren, who has achieved so much in his time leading the business. … I am keen to lead the Company into the next phase of growth, working even more closely with … the Board, our employees and our customers as well as continuing to develop the ARM partnership.

East was appointed the chief executive of ARM during 2001, when group revenue was 146 million pounds and pre-tax profit was 50 million pounds. By 2012, the business had expanded about fourfold, with revenue having improved to 577 million pounds and pre-tax profit having advanced to 277 million pounds.

East’s tenure at the top has seen ARM receive royalties on some 40 billion microchips sold by partners that now total more than 300. Such progress helped ensure that early ARM shareholders enjoyed a 20-fold return on their investment.

Prior to today, City experts reckoned that ARM‘s earnings may jump from 15 pence to 19 pence per share during 2013, which would value the shares at 48 times possible profits. A predicted 5 pence per-share dividend offers a prospective 0.6% income. Of course, whether the illustrious growth record, East’s departure, and that racy multiple of 48 all combine to make ARM shares a buy remains your decision.

But if you already hold ARM shares and are seeking different high-growth opportunities, this special free report explains how backing market-leading companies in high-growth sectors can provide wonderful returns to smart investors. Indeed, many of the shares highlighted in the report have delivered gains that surpass even those of ARM. Just click here to download this wealth-creating report today — it’s free.

The article Boss of ARM Holdings to Retire in July originally appeared on Fool.com.

Maynard does not own any share mentioned in this article.
The Motley Fool has a disclosure policy.
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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Dow Jones Flat Ahead of Fed Meeting and Housing Starts

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By Roland Head, The Motley Fool

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LONDON — Stock index futures at 7 a.m. EDT indicate that the Dow Jones Industrial Average may open up by 0.07% this morning, while the S&P 500 may open 0.1% lower.

No decision has yet been made on the final terms of the Cypriot bailout, but reports this morning suggest that savers with deposits of less than 20,000 euros may end up being exempt from the bank levy. Any decision has to be voted on in Cyprus‘ parliament, and as yet policymakers have not agreed upon an acceptable deal.

At home, today’s economic reports may provide more detail on the housing-market recovery. At 8:30 a.m. EDT, housing starts in February are expected to have risen slightly to 913,000, up from 890,000 in January. Similarly, an increase in housing permits to 925,000 is expected, up from 904,000 in January. The Federal Reserve’s Federal Open Market Committee begins a two-day meeting today but is not expected to change its current commitment to monetary easing.

In corporate news, Adobe Systems is due to report earnings after the closing bell tonight, while shoe retailer DSW is expected to report fourth-quarter earnings of $0.72 per share on sales of $601.9 million before markets open this morning. Other stocks that could be actively traded include Electronic Arts after the video game maker announced that its CEO, John Riccitiello, has resigned and will leave the company on March 30. EA also announced that earnings for the current quarter are likely to be “at the lower end of, or slightly below” its previous guidance, which suggested earnings of between $0.92 and $1.12 for the current quarter on revenue of $1.12 billion to $1.23 billion. A poll of analysts by Thomson Reuters suggested that EA‘s earnings may now be as low as $0.65 on revenue of $1.08 billion. EA shares are 0.75% higher in premarket trading.

European markets
European markets drifted lower this morning, but there were no dramatic sell-offs despite the ongoing uncertainty in Cyprus, which has extended Monday’s bank holiday until Wednesday to prevent the risk of a bank run. Although there are fears that a similar solution could be applied in Spain or Greece, the situation in Cyprus is slightly different because the tiny nation’s banking system is eight times annual GDP and has almost no debt — it is entirely funded by deposits. This means that a haircut for bondholders would not raise sufficient funds to meet the bailout requirements.

At 7:40 a.m. EST, the DAX was down 0.3%, the CAC 40 was down 0.59%, the FTSE MIB was down 0.32%, and the IBEX 35 was down 0.62%. In London, the FTSE 100 was down 0.09% as mining stocks fell heavily due to a combination of broker downgrades and lower iron-ore price forecasts from key players such as Rio Tinto. Smartphone chip designer ARM Holdings was also lower, down 3.3% after announcing the retirement of its CEO, Warren East.

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Source: FULL ARTICLE at DailyFinance