Arm touts cloud computing expansion, royalties to IPO investors
By Echo Wang and Svea Herbst-Bayliss
NEW YORK (Reuters) — SoftBank (TYO:9984) Group Corp's Arm Holdings Plc on Thursday told potential investors in its roughly $5 billion initial public offering that cloud computing expansion and royalty revenue represented major growth areas for the chip designer.
In a gathering of more than 100 investors at one of New York's most luxurious hotels, Arm Chief Executive Rene Haas and his management team gave details on the company's prospects beyond the mobile phone market, of which it already commands a 99% share, people who were in attendance said.
Weak mobile demand during a global economic slowdown has caused Arm's revenue to stagnate. Overall sales totaled $2.68 billion in the 12 months to the end of March, compared to $2.7 billion in the prior period.
Arm is seeking a valuation on a fully diluted basis of $50 billion to $54.5 billion, less than the $64 billion SoftBank assigned to it in a transaction last month with the $100 billion Vision Fund that it manages.
While some investors and bankers that Reuters spoke with after the presentation were upbeat, it remained unclear how strong the IPO's reception would be. Arm has already secured the participation of several customers, including Apple Inc (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) Corp and Alphabet (NASDAQ:GOOGL) Inc, as investors in the IPO. It is scheduled to close the books and price the offering on Sept. 13.
Arm told potential investors on Thursday that the cloud computing market, of which it has only a 10% share and therefore more room to expand, is expected to grow at an annual rate of 17% through 2025, partly thanks to advances in artificial intelligence. The automotive market, of which it commands 41%, is forecast to expand
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