IPO-bound ARC touts its royalty stream

IPO-bound ARC touts its royalty stream
By Chris Edwards, EE Times UK
September 8, 2000 (10:55 a.m. EST)
URL: http://www.eetimes.com/story/OEG20000905S0015

LONDON — ARC International plc, a developer of configurable processor cores, has confirmed that it intends to list on the London Stock Exchange some time this fall, and to use the capital it raises for expansion and acquisitions.

Meanwhile, the company's president and chief executive officer, Bob Terwilliger, said his company is already getting higher royalties per chip for its technology than either ARM Ltd. or MIPS Technology Inc., rival processor core developers that have both undergone successful initial public offerings (IPOs) of shares.

Terwilliger said that ARC now has more than 50 license deals in place and was adding more at the rate of eight a quarter. A number of them involved the use of multiple ARC cores on one die, he said.

One design in progress for a telecommunications infrastructure application has no fewer than 260 ARC cores on one die, but Terwilliger said that this deal was not the reason for his company's higher per-chip license values.

"The royalty revenues we get are high, at least five times those of ARM or MIPS. We are getting high markups on single instances because the fixed architectures are competing head-to-head. The purchasing departments can play them off against each other," said Terwilliger.

Terwilliger said ARC's IPO had been delayed by the acquisition of two privately-held companies in the spring. He denied that the volatile state of the stock markets led the company to raise $50 million in a round of private funding just three months ago rather than go to an IPO that had originally been planned for the same time frame.

The company bought intellectual property (IP) supplier VAutomation and embedded software company Precise Software Technologies in late March.

"We had to take a quarter to get the financials into compliance with our own. It had nothing to do with the markets," said Terwilliger. "The $50 million made sense because we didn't have to go to a public offering just to find ope rating capital."

Instead of listing on NASDAQ, the company has decided to go with only a London-based offering that will focus on international institutions on both sides of the Atlantic Ocean rather than on private shareholders.

"We felt the London market was the right place to take the company public. Following the Bookham and Parthus IPOs, we believe that the London institutional investors are behind us," said Terwilliger.

— Chris Edwards is editor of Electronics Times, a sister newspaper of EE Times based in the United Kingdom.