Arm Holdings (ARM, Financial) experienced an 11% decline in its stock price following a lower-than-expected first-quarter earnings forecast. The chip supplier cited global trade and economic uncertainties as reasons for not providing a full-year guidance. While Arm's fourth-quarter revenue slightly exceeded analyst expectations, the company remains cautious about future quarterly performance.
Recent global tariff announcements by former President Trump and stricter export restrictions on advanced semiconductors to China have cast a shadow over the semiconductor industry's outlook. Arm's CFO, Jason Child, mentioned that due to these uncertainties, visibility at the start of the year is lower than usual, making it unwise to issue a full-year guidance.
Arm projects first-quarter revenue between $1 billion and $1.1 billion, with the midpoint below analyst expectations of $1.1 billion. The company also forecasts adjusted earnings per share between 30 and 38 cents, falling short of the anticipated 42 cents per share.
CEO Rene Haas noted that Arm's increasing revenue share from chip-based patent fees, linked to sales of devices like smartphones and laptops, makes business predictions challenging. Despite the tariffs, the impact on Arm's business has been minimal, as only 10% to 15% of shipments end up in the U.S.
