ARM shares rocket following 3Com deal

ARM shares rocket following 3Com deal
Alex Mayhew-Smith ARM Holdings has expressed surprise at its recently wildly varying share price following the announcement of a technology alliance with US networking firm 3Com. ARM’s shares rose by over ?4 on one day to a new high of 2467.5p and fell the following day by 55p. “I don’t know why it has happened, it surprises us,” said Jonathan Brooks, ARM Holdings’ finance director. “However, people in the UK are surprised by our share price, while in the US there is an understanding of what we do.” The deal with 3Com is not a licensing agreement, said Brooks, but represents the first formal recognition of ARM’s value as a brand name. The agreement amounts to a declaration by 3Com that it will use ARM’s processor architecture in several volume products. The cores will enable 3Com to provide a range of intelligent, high-performance networking solutions, said ARM. “I don’t think the 3Com deal is the main reason [for the rise in share price]. There is a lot of demand for our technology in Europe. There are investors who want to invest in technology but not many companies to invest in,” he added. In contrast, in the US the level of investment can be spread to competitors of ARM such as MIPS Technologies. “We hope it will be put into lots of products, making it a global standard… In real terms ARM will get royalties back from suppliers to 3Com,” said Brooks. “It is not big news to the investment community but validates our story so far.”


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