Oct 21 (Reuters) – British chip designer ARM Holdings reported disappointing royalty revenue in the third quarter, resulting in a 12 percent rise in total revenue to $ 320.2 million, just short of market expectations of $ 326.3 million.
Third-quarter pretax profit for the group, whose chip designs are in almost all smartphones, rose 9 percent to 101.2 million pounds, broadly in line with expectations.
The company, which reports royalty revenue a quarter in arrears, said market data underpinned the short-term outlook for royalty revenues, and it expected group dollar revenues for the fourth quarter to be in-line with market expectations of about $ 350 million.
Cambridge-based ARM said the trend for royalties, which it receives on every chip shipped by its partners that contain its intellectual property, was improving as the consumer electronics industry worked through a backlog of inventory that built up earlier in the year.
Apple Inc, which uses ARM designs in its iPhone 6, reported a better than expected 16 percent jump in iPhone sales on Monday. But due to delayed royalty recognition by ARM, those royalties will largely be in ARM’s fourth-quarter results.