UK-based chip designer ARM Holdings PLC (NASDAQ: ARMH) reported earnings earlier today, posting revenue of about $209.4 million, well above estimates of $201.23 million, but below revenues of $217 million in the fourth quarter of 2011. Earnings per ADS totaled $0.13, a penny below the consensus estimate, and it is that miss that is weighing on the share price in the pre-market this morning.

ARMH has other complications as well. The company’s designs are used in a variety of mobile devices, including iPhones and iPads from Apple Inc. (NASDAQ: AAPL) which uses chips manufactured by Qualcomm Corp. (NASDAQ: QCOM). Nvidia Corp. (NASDAQ: NVDA) and Texas Instruments Inc. (NASDAQ: TXN) also use ARM designs. The world’s biggest chip maker, Intel Corp. (NASDAQ: INTC), has not been a major force in the mobile device market, but that is about to change.

Intel launched its ‘Ivy Bridge’ processor family yesterday. The chip uses less power while still offering more computing punch. A version of the chip is scheduled to be released before summer, and that could have an impact on ARM’s business.

And what a business it is. Gross margins for the quarter were 94.4%, the same as they were in the same period a year ago. In the fourth quarter of 2011, gross margins were even higher — 96%.

For the full fiscal year, ARM said it expects “dollar revenues for the full-year 2012 will be in line with current market expectations.” The consensus estimate is $885.2 million.

Given that ARM’s quarterly performance can be characterized as merely ‘okay,’ that the company missed the consensus earnings estimate, that Intel is about to go after ARM’s main market, and that the company’s outlook remains unchanged, it’s no surprise that in the pre-market this morning, ARM ADSes are down more than -3% at $26.70 in a 52-week range of $22.10-$32.18.

Paul Ausick

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