ARM Holdings may not be the most widely recognized name in technology amongst mainstream consumers, but the company is one of the main driving forces behind the smartphone revolution of the twenty-first century. The company designs the vast majority of chips that go into modern day smartphones, but it is far from a one-trick pony. The UK-based company also designs microprocessors for a wide array of devices, ranging from smartwatches to televisions and Wi-Fi routers to Bluetooth headsets. While ARM played second fiddle to Intel’s x86 architecture throughout the latter half of the last century, the increasing adoption of smartphones around the world over the past several years has now made ARM architecture the predominant computation platform in the world, with almost 15 billion devices shipped last year powered by chips designed by the Cambridge, England-based company.
With mobile platforms expected to rule the roost for some time to come, ARM has now become a highly-valued technology company, which can be gauged by the fact that Japanese tech major SoftBank reportedly offered around $32 billion to buy the British company. At that price, the company is being valued at 70 times ARM’s net income last year, which gives it a PE ratio similar to that of American internet major, Facebook. While that already is a significant premium to the company’s current valuation, online speculations seem to suggest that companies like Apple or Intel might have also been interested in snapping up the independent British firm as manufacturers start embedding microprocessor chips into everything from wristwatches to clothing. That trend is only likely to intensify in coming years with the expected increase in IoT devices, which are being tipped to become more common in a few years’ time.
SoftBank, of course, is no stranger to making big-ticket purchases abroad, having acquired a 72% stake in American telecom company, Sprint, back in July 2013. The acquisition, however, has been a fairly contentious one, with SoftBank shareholders getting increasingly restless in recent times with Sprint’s continued underperformance against its nearest rival, T-Mobile USA. SoftBank, meanwhile, has gone through some turbulence in recent times, with its board President, Mr. Nikesh Arora, leaving the company recently for greener pastures elsewhere, although the latest developments are being speculated to have been his brainchild while he was still at the company.