Why ARM Holdings Is Up 53% During the Last 12 Months


ARM has advanced 53% to 896 pence during the last twelve months, making the share one of the best performers in the FTSE 100.

The company, which designs microprocessors used in a wide variety of technology devices, including Samsung mobiles, Asus netbooks and Sony tablets, seems to have impressed investors with a series of encouraging statements.

During July, ARM announced half-year results for 2012 that highlighted an interim dividend of 1.67 pence per share, an increase of 20% from 2011's payout, as well as a 23% rise in second-quarter pre-tax profits to £67 million. Also revealed was the inclusion of ARM technology in a new range of Microsoft tablet computers.

During October, ARM's third-quarter statement highlighted a strong normalized free cash flow that nearly doubled the Q2 performance, jumping from 47 million pounds to 88 million pounds. Earnings per share were also on the rise, up 22% to 3.71 pence.

Then in February, ARM disclosed full-year results that revealed the final dividend to be 2.83 pence per share, up 35%. The annual numbers also showed revenue up 17% to 577 million pounds and pre-tax profits up 20% to 277 million pounds.

Warren East, ARM's chief executive, said:

ARM has seen good revenue and earnings growth throughout 2012. Customers are developing products to meet the needs of the post PC era and are driving demand for ARM's most advanced technology. In Q4 we again saw influential market-leaders demonstrating their commitment to ARM technology by licensing our latest products. Royalty revenue has also grown strongly during Q4 underpinned by ARM's market share gains and an increased royalty percentage from Cortex-A class processors being deployed into smartphones and tablets.

East was also passionate about ARM's prospects for 2013, citing new markets and a record order backlog. He believes the company's "leading technology" and "thriving ecosystem of partners" will place it in a position to succeed.

ARM's first-quarter update for 2013 will be published on April 23, which may reveal further positive news that can encourage investors.

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