ARM to consider higher dividend ratio, buybacks to reduce cash

BARCELONA Thu Nov 15, 2012 1:40pm EST

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BARCELONA Nov 15 (Reuters) - British chip designer ARM said it could increase its dividend payout ratio or buy back shares to reduce its cash pile, which it built up as a buffer to uncertainty in the global economy.

Chief Financial Officer Tim Score said the company had allowed cash to "ride up" since the downturn. It had 478 million pounds ($760 million) of cash on its balance sheet at end-September.

"Since the downturn we've grown the dividend at 20 percent per annum, and gradually increased the payout ratio by growing it faster than earnings," he said at the Morgan Stanley Technology, Media and Telecoms conference on Thursday.

"Potentially that in itself would not be enough to keep the cash pile under control, in which case we will do other things: we may do other buybacks, we may step up the dividend."

"The plan on the record is to grow the payout ratio, and probably over time the 30 percent payout (ratio), as it is now, will trend to 50, and potentially north of there."

ARM consistently outperforms average growth levels in the semiconductor industry, partly because its chip designs are favoured in the fast-growing segments of smartphones and tablets.

Its processor blueprints are licensed to chipmakers, which in turn pay it a royalty of 1-2 percent of the selling price for each chip shipped in devices like Apple's iPhone and iPad.

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