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Profits fall at Imagination Technologies despite strong demand for iPad

A surge in demand for smartphones and tablets failed to power up profits at Imagination Technologies, the company behind the graphics chips for iPads and iPhones
Profits fall at Imagination Technologies despite strong demand for iPad

A surge in demand for smartphones and tablets failed to power up profits at Imagination Technologies (LON:IMG), the FTSE 250 mobile graphics and microprocessor chip designer.

The company, which is behind the graphics chips for Apple’s iPad and iPhone, suffered last year at the hands of some key customers under pressure, with licensing revenues down from £34.4mln to £29.1mln.

This, along with a poor showing from digital radio division Pure, dragged adjusted pre-tax profits down to £34.3mln from £36.8mln.

It comes after May’s profit warning that saw the shares fall 26% in one day.

As well as phones, tablets and digital radios, Imagination’s chips are used in TV sets and set-top boxes.

“We have established leading positions in two of the fastest growing global markets: smartphones and tablets,” said chief executive Hossein Yassaie.

“In smartphones, we are on course to maintain strong market share, whilst we provide the technology for many of the leading tablets.

“We are also well positioned to address the growing requirement for the existing and emerging categories of devices for home entertainment, digital health, automotive, security and utilities markets whilst meeting their ever-expanding range of communication needs.

“We have started the year well and are on course to see over 650m units (excluding MIPS) shipped in the current financial year - another significant step towards our 1bn unit shipment target in 2016.”

Broker finnCap stuck by its ‘hold’ recommendation on Imagination after what it described as “a poor set of results” as expected.

It said revenues up 19% to £151.5mln were in line with expectations, but adjusted pre-tax profits disappointed the broker.

Royalty revenues meanwhile grew strongly, up 49% on the year before.

Shares fell 6.2% to 286p each.

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Imagination Technologies Group Timeline

Article
September 17 2014

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