ARM, Apple and Intel

That old rumour that Intel will try to buy ARM and that Apple will up its stake in ARM to stop that happening is engaging the Yanks again.

So much so that ARM’s shares hit 1069p, not far off its all-time high of 1080p.

This would not, of course, be the first time that Apple has held a significant stake in ARM.

In 1990, when ARM was founded by Acorn, VLSI Technology, Nippon Investment and Finance and Apple, Apple owned 43% of ARM, though that had been reduced to about 15% by 1999.

Nowadays, ARM is a big morsel to swallow. ARM’s market cap is around $22 billion with a sky-high p/e ratio of 87 compared to the FTSE average of 15 and the S&P average of 19. So ARM is absurdly expensive to buy on fundamentals, while Intel or Apple control of ARM would reduce ARM’s value to zero as its customers do a runner.

And it seems unimaginable that there would be any regulator anywhere in the world which would approve an Intel take-over of ARM thereby extending Intel’s PC monopoly into mobile.

But if it ever did come to a pissing match between Intel and Apple for control of ARM then, on the deepest pocket indicator, there’s only one winner: Intel has cash of $14 billion and debt of $12 billion; Apple has $178 billion cash and debt of $43 billion.

Furthermore, of course, Qualcomm might pitch in on Apple’s side with some of its $17.5 billion of cash unimpaired by any long-term debt.

Of course ARM reports next week and the current rumours swirling around New York are probably just a few clever-clogs trying to manipulate ARM stock ahead of the earnings announcement.


Comments

4 comments

  1. A good point, AnotherDavid, I think almost everyone reckons Intel’s blind, blinkered, $4bn a year obsession with getting x86 into mobile is bordering on insanity while it has a much better route to getting a profitable mobile IC business which is to make ARM chips.

  2. Don’t you mean “Intel taking an ARM license again”….
    Before flogging it off to somebody else.
    David

  3. I couldn’t agree more, Stooriefit, Intel taking an ARM licence and using it for mobile is a sane way for Intel to go. This ruinous madcap attempt to establish x86 in mobile is a result of blind ideology at Intel.

  4. I wonder if a broker has half heard a pub conversation and took “Intel are going to by ARM” from “Intel are going to buy an ARM architecture license”…

    The latter would add value to both companies, the former would destroy the value of at least one.

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