ARM Holdings Plc’ share price up, projects improved second half results amid recovery in the smartphone market

The chip designer ARM Holdings Plc announced that it projects its royalty revenue growth to accelerate again during the second half of the year amid recovery in the smartphone market. The companys shares jumped as much as 5%, marking the biggest intraday advance since April 17.

As reported by Reuters, the company said in its statement: “Market data indicates improving semiconductor industry conditions, leading to the expectation of an acceleration in royalty revenue growth in the second half of 2014.”

The company also shared its results from the first financial quarter. According to the companys statement, its net income over the first three months of the current fiscal year increased from 10.5 million pounds over the same period a year ago, to 55.5 million pounds (94.8 million dollars). ARM Holdings also revealed that its first-quarter revenue increased by 9% and reached 187.1 million pounds (309.6 million dollars).

Mr. Tim Score, who is the Chief Executive Officer of ARM Holdings Plc, said in a telephone interview that the fees collected by the company when its customers use its technology in semiconductors, is expected to return to “normal” growth levels. He also explained that the “normal” levels has been previously considered to amount to 15% or more.

Mr. Score said in the call, which was cited by Bloomberg: “The prognosis for the second half looks good. We’re going to see rollouts of new technology, 4G, LTE, which is going to increasingly incorporate the latest generation of ARM technology.”

The overall growth of ARM Holding Plc was reported to have slowed due to the decreased customers demand for high-end smartphones. Currently, the company supplies chip designs for more than 95% of mobile phones manufactured in the entire industry. Still, ARM Holding believes that its revenue will rise thanks to connected devices such as technology for servers, wireless-enabled vehicles and thermostats.

ARM Holding Plc was adding 4.98% to trade at 875.00 pence per share by 9:22 GMT, marking a one year change of -3.42%. According to the information published on the Financial Times, the 22 analysts offering 12-month price targets for ARM Holding Plc have a median target of 1,045, with a high estimate of 1,400 and a low estimate of 680.00. The median estimate represents a 25.37% increase from the last price of 833.50.