Original Source: FD (FAIR DISCLOSURE) WIRE
. Bruce Beckloff, ARM Holdings plc, VP, IR . Warren East, ARM Holdings plc, CEO . Tim Score, ARM Holdings plc, CFO . Nicolas Gaudois, Deutsche Bank, Analyst . Simon Schafer, Goldman Sachs, Analyst . Gary Mobley, A.G. Edwards and Sons, Analyst . Sandeep Deshpande, JPMorgan, Analyst . Stuart Adrian, Morgan Stanley, Analyst . Rob Sanders, DKW, Analyst . Corey Tobin, William Blair and Company, Analyst
ARM.L reported 4Q06 dollar revenues to be up over 20% vs. 4Q05. Full year earnings in 2006 grew by 19%.
A. Key Data From Call 1. Full year 2006 earnings = grew by 19%. 2. 4Q06 dollar revenues = up over 20% vs. 4Q05. 3. 4Q06 normalized OpEx = 40.8m pounds. 4. Cash balance at the end of Dec. = 128.5m pounds.
S1. Business Review (W.E.) 1. Operational Highlights: 1. A very good year which unfolded pretty much as outlined in Jan. 2007 when Co. indicated approx. $480m of revenue and 150m Pounds of cost and handful of important delivery milestones in both Processor Division and Physical IP division. 2. In 4Q06, dollar revenues were up over 20% vs. 4Q05. 3. Sales team finished with a very strong bookings qtr. 1. Came into 2006 with record backlog and a record bookings qtr. by a considerable margin. 2. Exited 2006 with a substantial increase in the backlog, which will benefit over the next several years. 2. Processor Division: 1. Got over 460 licenses deployed across 188 partners. 2. The ARM11 licenses (indiscernible) 52 in total with more licenses now being purchased for use in non-wireless application. 1. So far ARM11 is not yet in the foundry program. 3. ARM7 and ARM9 continued to sell well throughout the year with a further two and five being added respectively in 3Q06 alone. 4. In Cortex family, the initial Cortex-A8 product is an outstanding processor, both in terms of power consumption and performance. 5. 1st silicon is now available and is operating exactly as planned at over 1 gigahertz and half a watt. 3. Licensing: 1. Cortex family of products became fully available halfway through the year with the Cortex-A8 and R4 being delivered. 2. Added more licenses during the year with 13 added in the year as whole, five in 4Q06 alone. 4. Physical IP: 1. Continued to benefit from the investments and management
changes that Co. has been making. 2. Signed 24 licenses in 4Q06, 77 in the year, bringing the total Physical IP license space now up to 290. 1. Highlight of Co.'s licensing was 45-nanometer licenses signed with IBM's common platform partners. 3. Now has five consecutive quarters of revenue improvement in the Physical IP division. 4. With 45-nanometer development in full swing, Co.'s attention is now turning to 32-nanometers. 1. Got the addition of SOI technology. 2. Product portfolio is beginning to be recognized as of genuine leadership standard. 5. Alongside further development in 2007, Co. will be concentrated on improving productivity. 5. Volume Shipment: 1. Pushed along by strong growth in low-end handsets. 2. Smartphones and 3G phones continued to grow at the same time employing multiple ARM.L processors, Graphics, and in some cases Embedded Software as well. 1. On avg., Co. has now reached 1.5 ARM.L calls handset. 3. Progress is along being rapid in the non-wireless sector with market share gains crossed many applications. 1. Smartcards and microcontrollers have grown particularly well. 4. 100% growth in the Embedded sector. 5. Overall Processor shipment were up 47% to just under 2.5b, less significantly ahead of well known volume goals for the medium term. 6. Physical IP products in volume terms, primarily use ASICs and ASSPs. 1. Overall, market has grown in dollar terms by approx. 10% over the years. 7. Physical IP royalty has grown in dollar terms by nearly 30%. 1. Demonstrating a healthy growth in market share. 6. Development Systems: 1. Revenue pulled ahead in 4Q06. 1. Record qtr., just over $14m.
2. During the year, the highlight has really been the adoption of electronic system-level design products (ESL products).
1. These stand from Co.'s acquisition of Access in late 2004.
2. In 2006, they have been particularly strengthening the backlog with bookings up over 65% vs. the prior year. 3. Smaller business units have begun to make a mark as well. 4. Six months after acquiring new Graphics business, encouraging to talk about two licenses signed towards the end of 4Q06. 1. One for mobile and one for non-Mobile application. 2. Further encouraged by the level of interest from customers that was being in those Graphics products.
5. [Data Engines] business units has achieved very high profile
with significant design wins. 6. Fabric business units has enjoyed an excellent year, including as announced last week, design wins with companies like Broadcomm and Toshiba. 7. Fabric products are there to offer customers security and reliability when they are building complex …