Investors in the $56 billion semiconductor group Arm may be in for a bumpier ride than they hoped. That’s one takeaway from its quarterly earnings release on Wednesday, the first since a September listing. The good news is that CEO Rene Haas expects revenue in the fiscal year to March of roughly $3 billion, in line with analysts' expectations. The less good news, which dragged Arm’s shares down 8%, is that Haas said revenue in the fiscal quarter to December might be anywhere from $720 million to $800 million.
Admittedly, at the midpoint of the range that’s only $10 million below the mean analyst forecast, per LSEG. But the wide gap suggests a high degree of unpredictability. That’s because Haas isn’t sure about the timing of some future deals. A wobbly top line is not what investors want from Arm, which is trying to turn itself from a purveyor of lumpy semiconductor licences into a steadier, subscription-style royalty business. If that vision evaporates, so would Arm’s lumpy valuation. (By Liam Proud)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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