Arm shares tumble as traders say 'over-valued'

Shares in Arm Holdings, the computer chip designer for smartphones, tumbled more than 5% today despite booming profits as traders said it looked over-valued.

Pre-tax profits at Cambridge-based Arm, whose clients include Apple — which uses the firm's chips in its iPhone — surged 60% to £38.8 million in the third quarter. Revenues rose 34% to £100.4 million.

Arm shares, down 20.7p at 368.5p, have almost trebled in the past 12 months amid takeover speculation. Chief executive Warren East said the last three months to September had been "a good quarter for Arm".

Demand from the manufacturers of mobile computers such as the new tablet reading devices was "growing strongly".

He added that Arm was gaining market share in new areas such as digital TV and remote controllers and that despite the uncertain economic outlook, the company remained "well positioned for growth".