By contrast, ARM seemed to have a reasonably compelling growth story to tell.The trouble with this acquisition, ARM's first of any significance, is that it is strongly suggestive of an industry which is already past its main growth phase. Consolidation seems now to be the order of the day, and expensive consolidation at that.jeremy.warner independent.co.uk. By the company's own admission, the technology has reached a level of sophistication where it is beginning to outgrow the known laws of physics. Even so the deal is bound to be earnings dilutive, at least initially, and with the world economy faltering again, the timing just doesn't seem to be right to be splashing out with apparent abandon on New Economy expansion.Warren Buffett had in mind all technology shares when he warned about the dangers of investing in things you don't understand, but intellectual property and microchips are a particularly difficult thing to get your head around. Like virtually every other technology stock, the shares have suffered a calamitous fall since the heady days of the dot bubble. Protection and effective exploitation of intellectual property in such an environment becomes extraordinarily difficult to achieve.Sir Robin Saxby, the chairman, and his chief executive, Warren East, will struggle to convince that this is the right move for ARM.

At around 60 times earnings and approaching 10 times sales, Artisan is being bought on multiples more suited to the heady days of the technology bubble than today's downtrodden investment environment. Most of the consideration is in ARM shares, so Artisan's vendors will have suffered alongside ARM shareholders in yesterday's sell off. Marry ARM's software design with Artisan's components' IP, and you end up with a form of vertical integration which in something as small as a microchip would seem a more than logical response to a fast changing market.Yet it wasn't the industrial logic the City was questioning yesterday when it marked the shares down by 19 per cent Rather, it was the price. Artisan, the company it is proposing to buy, is a leading provider of physical intellectual property (IP) components for the same sort of integrated circuits as ARM caters for, so on the face of it, the two are highly complementary. One of the glamour stocks of the dot boom, ARM designs software for specialist microchips, mainly for use in mobile phones.

After agreeing to pay an astonishing $913m (£504m) for a US rival, ARM may be a case in point. Peter Ellwood's reputation as chief executive of Lloyds TSB never recovered from the ruin of his bid for Abbey National, which was blocked by the Competition Commission. The City was left wondering, "what now for Lloyds TSB?", and Mr Ellwood was unable to provide an answer. Tread carefully, Mr Crosby.¿ Overpaying ARMNever invest in anything you cannot understand, says Warren Buffett.

That's a big ask, especially as SCH is likely to respond by sweetening its terms and providing a full cash or cash equivalent alternative to its present shares and cash offer.All the signs are that Mr Crosby will bid It may be a bigger gamble than he thinks. HSBC combined with Abbey would have a larger share of the current account market than the HBOS alternative, but not by much, and its share of the mortgage and savings deposit market would be much smaller. Other UK banks might have more of a problem, but that won't stop them throwing their hats into the ring, if only for the purpose of thwarting HBOS. They can afford to take a more sanguine view of SCH.In making his bid, Mr Crosby therefore has to ensure that his terms are sufficiently attractive to make it worthwhile for Abbey shareholders to forgo the certainty of the existing offer from SCH for the possibility that HBOS may eventually, after a six-month investigation, be allowed.