xfdfw BLOOMBERG-TV-16
<Show: BLOOMBERG TV>
<Date: November 19, 2009>
<Time: 18:43:00>
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<Tran: 111916cb.550>
<Type: SHOW>
<Head: ARM Holdings President Tudor Brown Interviewed on Bloomberg
TV>
<Sect: News; International>
<Byline: Bernard Lo>
<Guest: Tudor Brown>
<High: Bloomberg's Bernard Lo interviews ARM Holdings President
Tudor Brown. They discuss overshoots on the build side, guidance for next year
in terms of profit, and the settlement between Intel and AMD.>
<Spec: ARM Holdings; Business; Guidance; Profit; Intel; AMD>
ARM HOLDINGS PRESIDENT TUDOR BROWN INTERVIEWED ON BLOOMBERG TVNOVEMBER 19, 2009
SPEAKERS: TUDOR BROWN, PRESIDENT, ARM HOLDINGS
BERNARD LO, BLOOMBERG NEWS
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
18:43
BERNARD LO, BLOOMBERG NEWS: Emerging market equity capital markets dragging to the undertow with the overall downbeat tone. Meantime on a specific corporate basis, Bank of America Merrill - B of A Merrill cutting its call on British ARM Holdings. The ARM Holdings from a neutral to an under perform.
ARM is a chip designer whose products are used in the top icon iPhone from Apple. B of A Merrill analysts say after rapid inventory refresh, we might be seeing a little bit of modest overshoot in stock up. Tudor Brown, President of the company, joins us on the show today.
Tudor, nice to have you on the program. Thank you very much for joining us so early.
TUDOR BROWN, PRESIDENT, ARM HOLDINGS: Thank you.
LO: Some concerns about inventory overshoot on the buildup side. Do you concur with the - can you let us know what's going on? Because B of A Merrill a little bit downbeat this morning.
BROWN: Well interestingly, we don't actually know ourselves very much about what is happening on inventory, because we only see reports of what has happened in the past, in a sense.
What is very clear is that the economy has bounced back, and shipments in calendar Q2 and Q3 have been very strong historically. Q4 still looks quite strong at the moment. And I think the question that we don't yet know is is that a sustained recovery into next year, or is that an overzealous building of stock for the end of the year?
The indications --
LO: Why don't you have more clarity? Are they not forthcoming? Do the customers not really know themselves? It looks like there's a little bit of miscommunication here.
BROWN: No, it's not miscommunication at all. It's just the way our business model works.
We get told about what was shipped in arrears. So therefore we only know actually about what has happened in the past.
Of course we are talking to our suppliers or the people we supply. And their confidence right now is quite good. But we won't actually know what they shipped until next quarter.
LO: Well you can certainly talk, Mr. Brown, in terms of the ARM contracts. Many are out there in the private market expecting 70 percent bump up in profits after a drop around 15 percent this year. Clearly the private sector believes that 2010 is going to be a banner year compared to this year. Can you maybe give us a little guidance along those lines?
BROWN: Well I think the issue is that 2009 has really been a year of two halves. The first half of the year was horrible for everybody off the back of overstocking in 2008. The second half of this year looks pretty strong. It's bounced back very strongly -better than we thought.
And I think if that is sustained into the first half of next year, then 2010 will actually look a pretty good year as well.
So I sort of concur that 2010 looks better overall than 2009, yes.
LO: The buzz in the market, in the aftermath of the huge settlement, after years of legal wrangling between Intel and AMD Advanced Micro was that this will allow Intel to take on the real threat to them, which is not a company which does basically the same thing - and that is PC desktop, laptop, whatever microprocessors - but a company like yours, because you're in a very different space, and yet you're getting under the skin of Intel.
Does the settlement between Intel and AMD affect you in any way? Does it - it certainly raises the bar and raises the heat, does it not?
BROWN: Well in a sense, what has happened between Intel and AMD is nothing to do with us. For many years, Intel and ARM have coexisted very happily. Intel is in fact a customer and a licensee of ARM. And we have operated in two very different markets. Intel has been in the desktop and laptop market, and we have largely been supplying the cell phone and the Smartphone market.
What has happened recently is Intel has said that they want to come into that - if you like, the Smartphone market. And so we've found ourselves in an overlapping situation. And therefore of course Intel is now being seen as a competitor to ARM.
LO: Mr. Brown, we'll continue this chat in a little bit. I want to talk that through a little more, and also, of course, the company ARM, has just recently announced more capacity and more initiatives toward Android products. We'll explore that with Tudor Brown from the company in a bit.
18:48
(BREAK)
18:52
LO: We've been talking to the head of ARM Holdings, Tudor Brown, joins us out of Taipei. Is it Taipei? Are you in Taipei? I can't even tell.
BROWN: Yes, I am.
LO: Okay, Taipei. I just want to - actually I just realized something. We didn't really set the tone for this. Some people might be wondering what does ARM do? So I'm going to do it in a nutshell, and you play the school teacher and correct me if I'm wrong.
Basically what you do is you do chip design and you license the technology to companies like Qualcomm, TI, Infineon. You're in iPhones, you're in the Nintendo DS Portable, Nokia, Samsung phones.
And really what is at the heart of - the core of ARM is these are low powered devices which basically make everything work together as opposed to the x86 based chips which are made by Intel and AMD and power most of the world's computers and servers.
And the reason we're talking, Tudor, is because the world is increasingly moving toward mobile. I don't even see desktop computers on sale at the electronics stores anymore. And that basically is the wave of the future, correct?
BROWN: Yes, I think your analysis is absolutely right. I think the world is going mobile. It has been for some time. People want flexibility and freedom. And what has happened most recently is that the internet is going mobile. And so now people can expect to, and do, access internet services over not only laptops, but over Smartphones and portable devices.
LO: However, if you look at Intel - and as you mentioned earlier, Intel and ARM are very, very different companies, but they have been making ground in what is your strongest domain of low powered devices. Is the handset chip market getting more and more competitive?
This comes at a time when Google's out with the Chrome operating system. There are more and more applications being synchronized with Android. How competitive is the landscape right now, Mr. Brown?
BROWN: Well the landscape's going to be very competitive, I think, as we go forward. What has happened, as we said, is that the desktop has moved down into the laptop, and more recently into the more portable netbook type product, whereas the Smartphones have become more capable, and are now running, if you like, standard software.
So companies like Adobe with Flash, Google with Android, and Google with Chrome are supporting the ARM hardware base. And so these two worlds are definitely coming together more closely.
LO: How many - tell me about Android. How many Android powered phones are going to be shipped next year? And how many are going to include ARM technology? Is that going to be a big buzz for 2010?
BROWN: I think Android is a very respectable operating system for high end phones. And I think it will start taking market share. I think most of those will be based on ARM technology. And I see that as a good thing. I think the movement there is good.
LO: And would you ever consider being an acquisition target or maybe an acquirer? Is that in the cards, or is this going to be an organic only company for some time?
BROWN: ARM has been doing acquisitions for many years along the way. But fundamentally our role, which is to supply the semiconductor industry with technology, means that actually I think we should stay independent. I think we serve the market much better by staying as an independent company.
LO: Good luck, Mr. Brown. We'll be watching this space with great interest as we roll into the New Year.
BROWN: Thank you.
LO: Tudor Brown, ARM Holdings.
18:55
END OF TRANSCRIPT
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