UK chip designer Arm Holdings is planning to shed 10 per cent of its workforce after it today announced its first ever fall in quarterly sales, but analysts said the company's difficulties will be short-lived.
ARM, which licenses its chip designs to companies including Intel and Texas Instruments for devices such as mobile phones, announced that revenues for the third quarter ending 30 September 2002 were down 11 per cent to £33.3m, compared to £37.6m for the same quarter last year.
Pre-tax profit was down 38 per cent to £8m, compared to £12.9m a year earlier.
The company confirmed that it would also be cutting its total workforce by around 10 per cent, which it said would result in annual savings of about £5m.
ARM blamed the downturn in the chip industry for drop in revenues, pointing to a slowdown in licensing. The company warned that this may continue unless conditions improve.
But Gartner chief analyst Jim Tully believed that conditions for ARM should improve over the next few months. "It's a question of how long it goes on for," he said.
"We are beginning to see signs of an upturn. Mobile handset sales are up on a year ago.
"As soon as the industry as a whole senses user demand going up, it will begin new development and will come to Arm for new designs."
Tully added that the future still looks good for ARM. "We would expect ARM's results to be a leading indicator for the state of the wider field," he explained.
"These are only very short-term problems; one quarter's worth of fairly severe problems. But [it will] improve as we get to the end of this year and the beginning of 2003."
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