UPDATE 1-ARM Holdings jumps, Apple bid rumour resurfaces

Thu Jun 10, 2010 6:51am EDT

* Shares up as much as 32 pct to 8-year high

* Traders cite renewed talk of Apple bid interest

* Company says not approached, deal would not make sense

(Adds analyst comment, background)

By Paul Sandle and Simon Falush

LONDON, June 10 (Reuters) - Shares in ARM Holdings Plc (ARM.L) jumped as much as 32 percent to an eight-year high on Thursday, with traders citing renewed talk of bid interest from its customer Apple Inc (AAPL.O).

By 1023 GMT, ARM was up 11 percent at 303.4 pence, after touching its highest level since 2002 at 362.4 pence.

The rumours have surfaced previously, most recently in April. [ID:nLDE63K0SZ]

"Hearing (an) old rumour that Apple want to bid for them," said one trader.

A spokeswoman for ARM said the chip designer had not received an approach, and said a takeover from Apple would not make sense, reiterating comments made by its CEO Warren East in April and its President Tudor Brown last month. [ID:nLDE64J289]

Apple was not immediately available for comment.

ARM has been benefiting from the launch of the new iPhone and from strong sales from the new iPad, both of which analysts say use ARM technology.

Apple CEO Steve Jobs displayed a photograph of a chip in the fourth-generation iPhone on Tuesday, with ARM's name clearly visible, which was the first confirmation from him that ARM's technology is in Apple products. [ID:nN07100602]

Analyst Nick James at Panmure Gordon said the likelihood of ARM getting a bid from Apple or anyone else was very low in his view, as the company's business model was based on licensing its technology to a large community of chip makers.

Customers were already developing chips based on ARM technology for launch in three to four years, he said, and would have ample time to then switch to rivals like Intel (INTC.O) or Imagination (IMG.L).

He said he thought the real driver of ARM's rise was an increasing bullishness on the prospects for the tablet market, ignited by the iPad.

"The response to the iPad has been well ahead of expectations, and it isn't taking long for people to start to realise the potential of this class of device," he said.

"As we have previously said, we believe over the long term -- 10 years -- it could approach the ubiquity of the mobile phone." (Additional reporting by Jon Hopkins and Brian Gorman, editing by Will Waterman)

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