ARM CEO Argues Against Need for Apple to Purchase Company

[MacRumors]

Yesterday, rumors began to circulate that Apple is preparing a bid to acquire ARM, the chip design company at the root of processors used in the iPhone, iPad and many other mobile devices. Reaction to the rumors has been mixed, with many observers noting that there is little reason for Apple to purchase the company, given its existing expertise in chip design and its licensing arrangements with ARM.

The Guardian follows up with similar comments from ARM CEO Warren East, and while East does not directly discount the rumors, he does argue that there is no reason for Apple or any other company to purchase ARM to get what it needs for its products.

"Exciting though it is to have the share price pushed up by these rumours, common sense tells us that our standard business model is an excellent way for technology companies to gain access to our technology. Nobody has to buy the company," East told the Guardian.

The primary question seems to be what the advantage Apple would receive if it were to purchase the company. With existing licenses to ARM's technology, it seems at first glance that an $8 billion purchase of the entire company would not offer much more to Apple in that regard than it already receives. Others have argued that Apple could use its ownership of ARM to hamstring other mobile device manufacturers by cutting off access to ARM-based designs, but it is unclear whether such a move would be allowed by regulatory agencies and even if so, how effective it would be as other chip designers moved in to fill the void.

Article Link: ARM CEO Argues Against Need for Apple to Purchase Company

[Plutonius]

As others have said, the rumor was spread as a part of a pump and dump scheme (get the stock price up, sell the stock, and profit).

[redking31591]

Well, seeing that one of the founding members of ARM Holdings was Apple Computer Inc., the company would just be coming full circle. We can't exactly expect Acorn Computers or VLSI to come back and buy them.

[Grimace]

Buying AMD (getting ATI graphics!) would still be a better bet.

[ouimetnick]

I agree. All companies should have access to ARM's designs. If apple owned ARM, then we might see the smartphone industry collapse.

[mr_matalino]

Why buy the cow when you can get the milk for so very very cheap??

[lPHONE]

nobody "HAS TO" <-------- keywords

[cvaldes]

Originally Posted by mr_matalino

Why buy the cow when you can get the milk for so very very cheap??

Because basically it's the only cow in town. You get the cow and can keep all the milk for your own personal use. Nobody else gets milk.

Did you even bother to read the linked article?

[ryanw]

I think people are approaching this question incorrectly.

I think of it more like, "Well, apple sees that they're producing more and more devices with ARM processors every year, and same with everyone else. Seems like ARM is going to be the leader in this market. We want to personally be part of this growth."

So I don't know if apple is looking for something more than they have, other than they want to be able to avoid any situations like the new Macbook i5 vs Core Duo vs NVIDEO vs Intel Graphics processor situations FOREVER!

So, ARM is going to be GOING UP, Apple's use of ARM is going up, apple's dependency in ARM is going up, and apple owns chip manufacturing company already that uses ARM designs, to me it makes sense....

[Digitalclips]

Originally Posted by cvaldes

Because basically it's the only cow in town. You get the cow and keep all the milk for your own personal use.

Did you even bother to read the linked article?

Or, to 'milk' the metaphor some more ... you can get all the cream

[Tailpike1153]

Somebody fire that ARM's CEO. At least wait util the share price hits $20 before you start reigning in rumors.

[Auchron]

I personally think that this would be a great way for Apple to get their hands on IP technology and the inside scoop on how to better improve their own chipsets which it is clear that they want to develop.

I do not think Apple would "hamstring" other companies by owning ARM but I can see them develop chipsets with ARM/PA Semi and then use the better chips for themselves and then cripple them slightly and sell them to the competition. Similar to how Apple has, in the past, gotten their hands on Intel products before released.

Question is does Apple see the value in buying ARM to get that IP technology or does "getting the milk cheaper" have more cost effective benefits?

I guess it is a wait and see game.

[Tones2]

There's no way in the world the regulatory agencies will let this acquisition happen. It's anti-competative - They are both too big of players on the mobile device market.

Tony

[DaveGee]

While on the surface I agree with the ARM CEOs statements, I still have some question to the ongoing accuracy of those statements.


Sometimes these rumors are self germinating or invented by unscrupulous reporters or financial analysts.

Sometimes these rumors are 'trial balloons' floated by someone in one or more of the companies directly mentioned in the rumor in this case Apple and/or ARM

Sometimes there rumors are 'trial balloons' floated by other industry players to generate/gain an overall reaction to the concept without tipping their OWN hand. Lets say GOOGLE or MICROSOFT as just two random examples.

Now, the truth that comes from this rumor is this. The idea has been put 'into play' and if you MANY companies are holding executive talks about this potential buyout. It's on the lips and ears of all the top management of many corporations right now. The outcome in 99.9% of the companies is likely to be 'no action'. However this MAY spark one or more of the heavy hitters to potentially make a grab for ARM before Apple does (even tho Apple may have never made and offer).

The rumor is morphing into reality all by itself....

What would Apple say/do if it was known that Google or even Microsoft was making an offer to ARM? Apple don't do bidding wars. We all know that, but would they make an exception in this case? Either way, what would happen if MS or Google did make a successful bid for ARM? What kinds of issues would Apple face as a result?

So the ARM CEO saying 'all is well' doesn't really mean **** if ARM was taken over and he knows it... Unless I'm mistaken, his comments were made to do nothing but FUEL the possibility but then again... I guess a 'no comment' would have a similar effect so maybe I'm reading too much in his comments.

[kevinkt]

stop whining if they wanna buy you then then wanna buy you LOL

[Jaro65]

Originally Posted by Digitalclips

Or, to 'milk' the metaphor some more ... you can get all the cream

Oh the cream is good! The more the better.

But really, I'm not surprised at all that ARM CEO isn't exactly thrilled about being acquired by Apple. He gets to make all the deals now, as compared to being in an SVP role at Apple. That is, given that he would be staying on board.

[Flynnstone]

I think the biggest hurdle would be getting regulatory approval.

I just can't see it happen.
Apple is a relatively small user of ARM based micros.

[paul4339]

Originally Posted by cvaldes

Because basically it's the only cow in town. You get the cow and can keep all the milk for your own personal use. Nobody else gets milk.

Did you even bother to read the linked article?

Or to prevent someone else from buying the cow and cutting your milk supply off. If Apple's A4 relies on a ARM license (or design), then they may view it as a _possible_ threat.
Apple is one of the leaders in smartphones currently. Someone like Google can scoop up ARM to try to slow Apple down. They may be trying to buy a stake as a risk mitigation tactic (have some sorta of control or influence over all their critical components).

P.

[firewood]

Originally Posted by Tones2

There's no way in the world the regulatory agencies will let this acquisition happen. It's anti-competative - They are both too big of players on the mobile device market.

Apple is a small player. Nokia and Nintendo have shipped how many mobile devices containing ARM processors?

[MarlboroLite]

Fact is an Apple acquisition would be anti-competitive. There is not need to trash Google or Microsoft or whatever other company saying "they do it to!" or "they would do it in a heartbeat!" as a defense. Apple or Microsoft or RIM or Google or any company being serviced by ARM to then acquire the company in order to block the chips from going to competitors is by definition an anti-competitive power grab.

It might gain approval in the US since the regulatory bodies are a joke these days, but not in Europe where they actually take this stuff seriously.

[ThisIsNotMe]

Originally Posted by Flynnstone

I think the biggest hurdle would be getting regulatory approval.

I just can't see it happen.
Apple is a relatively small user of ARM based micros.

Why?

Are there other chip companies? Yes.
Are those other chips as good? No.
Does performance dictate a monopoly? No.

Hell, pop a C2D or atom into a phone if that is what you need to do, it is an option but not the best one.

[jerome65]

As much as the investors like Apple, they will eventually need to do something with that money in the bank. Their reason for not paying a dividend is that they can add more value to the company if they have the money on hand for purchases like this, however at some point in time the investors are going to start questioning that unless they make those purchases or investments that add to the value of the company or they start paying a dividend.

[bergmef]

I like the idea. They use enough that they want to point the direction of development. I'd say buy it.


And lets get one in the new apple tv.

[BC2009]

Somebody fire that ARM's CEO. At least wait util the share price hits $20 before you start reigning in rumors.

Not only his the spelling bad, the reasoning is too.....

As CEO he has a responsibility to put a stop to such rumors as soon
as he can.

1) If the rumor is true, you can not leak information like "we're being acquired by Apple" during an acquisition process. So if something got leaked he has a responsibility to diffuse it without confirming or denying the rumor.

2) If the rumor is false, then he needs to set expectations correctly for his shareholders.

If you went and bought ARM stock based on this rumor then you may have ended up being a sucker for somebody else's day trading.

[Scottsdale]

Originally Posted by Grimace

Buying AMD (getting ATI graphics!) would still be a better bet.

You're not forward thinking. Look at the future of Apple, Inc. It is already a consumer electronics company with more than 50% of revenues coming from iPods, iPhones... and soon to be calculated in, iPads. The ARM is the future, and SoC will probably one day become the system behind Mac OS. This technology is so much better for a company like Apple to acquire than a problematic competitor to Intel, as in AMD. It could use its cash reserves to buy ARM Holdings and even become a major licensing company too. Imagine holding all the cards for competitor to iPhone OS devices too. Apple would be much better off becoming more diverse. Look at what has happened since Apple stopped focusing on the Mac... incredible transformation in the last decade. With the expansion of iPhone OS products, and ability to expand the saturation of other networks (like Verizon) consistently, the ARM is where the money is at for Apple, Inc. We all have to remember, Apple is NOT a computer company anymore - it's a consumer electronics company first and foremost.