A "wonder stock" of 1999 that seems to have held up rather better than some of its tech boom brethren, ARM Holdings(LSE: ARM) still inspires strong feeling on either side. Is it an unassailable leader in a key industry of the future, or an overvalued tech company vulnerable to innovative competition, whose prospects are impossible to forecast?
James Carlisle (TMFJimmyC) and Maynard Paton (TMFMayn) take one another on in this week's Duelling Fools. Read both the arguments below, then get over to the Duelling Fools discussion board and vote to decide the outcome. En garde!
The Bull Case...
"Years ago, my mother told me a story about the man who invented "cat's eyes". Apparently, he placed wine bottles along each side of his driveway to help him navigate home with reduced headlights during the Blitz. My mother told me that he now gets 1p for every single cat's eye installed in this country. I have no idea whether this story is true (I suspect not) but I remember being stunned at how amazingly rich this man must be. ARM Holdings(LSE: ARM) could quite easily find itself in this position with respect to the chip market." ; more...
The Bear Case...
"The fact is that the currently huge expectations of profits over such a long period of time are riddled with uncertainties and risk. Any unexpected development, be it a slip up from ARM, a surprise competitor or the Chinese not taking up their "allocation" of mobile phones will see ARM's rating, and share price, collapse.
ARM -- a company that designs incomprehensible "here today, gone tomorrow" products and whose eye-watering valuation expects nothing less than consistent hyper-growth over the next decade. Foolish investors should stay well away." ; more...
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