The Fish Rots From The Head Down, And Arm Holdings Is Starting To Smell

Take a look at my recent contribution on Seeking Alpha.

Earlier this year, I published our short argument about Arm Holdings (ARMH). With the recent headlines created by the lowered guidance and Deutsche Bank’s downgrade of ARMH, as well as the one-day 9% drop that followed, I thought it would be a good time to publish our more recent update. For those of you that have read the past article, you will notice that some of the facts remain the same, while many new ones have been added. (If you are an ARMH bull and hate my view, please make sure to leave a relevant comment before bashing my input with insults.)

Arm Holdings is a European Intellectual Property firm that designs low powered microprocessors that are used in the majority of the mobile devices around the world. ARMH is a fabless company, meaning it does not actually manufacture chips, but rather it licenses its technology to companies like Apple (AAPL), Qualcomm (QCOM), Nvidia (NVDA), Samsung (SSNLF.PK) and many others. Unlike other well-known semiconductors such as Intel (INTC) or AMD (AMD), ARMH’s two sources of revenue come from the Royalties and Licensing (R&L) fees it receives for each device that is using its low power chip technology. ARMH’s stock has had a major run over the last several years, and it has become another company priced to perfection… (CONTINUE READING)

About Ron Reuven

Yaron “Ron” Reuven is the President & Chief Investment Officer of Reuven Capital Investments, LP. His expertise is in business valuations, financial model & theory analysis, and financial industry compliance.
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