British computer chip designer ARM Holdings shocked investors today with a warning that its third quarter profit would be just half the expected level, sending its shares crashing over 60 per cent.
ARM, which develops and licenses designs for low-power chips used in mobile phones and other gadgets, blamed worsening semiconductor markets and said the worst ever downturn in the chip industry had forced customers to delay purchases.
ARM now expects pre-tax profits to come in at around £8 million for the quarter ended in September 30th, against analysts' forecasts of £16 million.
ARM had been cushioned to some extent because it mainly sells its designs for research and development - a business that has been less affected by budget cuts. But the warning suggested its customers might be reducing R&D spend as well.
Analysts were shocked by the unexpected warning from ARM, which has managed to meet expectations for the last 18 quarters.
Shares in ARM, which have fallen 86 per cent in the year to date, were 62 per cent lower at 48p in London. At the height of the technology bubble in early 2000, ARM shares fetched well over £10.
The firm said it did not see any significant upturn in market conditions before next year.