Technology giantApple (NASDAQ: AAPL.US)reported a blow-out set of quarterly results this week, driven byrecord sales of iPhones and a strong demand for Apple products within China.
Apple smashed Wall Street forecasts for the quarter, reporting sales of $74.6bn for the three months ending 27 December, up nearly a third from the same period last year. During the quarter the company sold 74.5m iPhones and reported a profit of $18bn, which was thebiggest profit ever reported by a public company.
ARM is clearly set to benefit from this strong performance by Apple. Initial indications suggest that thanks to Apples strong performance, ARM is set to report blow-out fourth quarter results.
Before Apple announced its fourth-quarter results, ARMs management was already expecting a strong fourth-quarter performance. In particular, At the end of the third quarter, ARMs management stated:
ARM enters the final quarter of 2014 with a robust opportunity pipeline that points to both strong license revenues in Q4 and a sequential increase in order backlog. With market data underpinning the short-term outlook for royalty revenues
Management then went on to say that the company expected to report revenues of around $350m for the three months to December. Apple actually beat its own estimates for sales by 10%, so ARM could be set to report a similar out performance.
Actually, some of Apples other suppliers have already started to reportfourth-quarter results. For example,K Hynix, a supplier of memory chips to Appleposted record fourth-quarter profit that beat analyst estimates.
Hynix reported net income for the period of $1.5bn, surpassing analyst estimates by nearly a third.
However, ARM doesnt just provide chips for Apple, it also suppliesSamsungand unfortunately, Samsung has been hurt by Apples success. Specifically, Samsungs mobile phone salesduring 2014 fell by 21% as competition increased in the Chinese market.
Nevertheless, Apples phone sales eclipse those of Samsung, so ARM is unlikely to report a noticeable impact from falling Samsung sales.
Whats more, ARMs sales are set to receive a further boost over the next two years as Apple is planning toremove Intel Corporation from its supply chain. Macs and other iOS devices will be installed with processors that use ARMarchitecture in the future, compared to the current Intel set-up.
Set to surge
So all in all, figures suggest that ARM is set to report record revenues and profit for the fourth quarter and the company’s shares could be set to surge following the news.
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