Best of breed U.K. based tech companies
“anaLyStS EStiMatEd tHat tHE dECiSion wouLd KnoCK an EStiMatEd £10M (12 pER CEnt) FRoM FuLL-yEaR REvEnuES.” Its last interim management statement was poorly received with doubts raised whether Imagination will meet its full year numbers due to vague language from the top team. Despite strong growth in unit shipment volumes, with the key segments of mobile phone, computing/tablets, mobile multimedia/gaming and home consumer all seeing growth, average royalty rates have been getting steadily diluted as the company’s IP is being used in cheaper devices as well as subdued iPhone demand in which the company’s chips are used as consumers waited for iPhone 5. With Apple currently struggling to meet demand for iPhone 5, the concerns remain.
With a forward price earning for the year end April 2013 of around 31, Imagination, like ARM, is hardly cheap despite the sell off from the highs this year with some of its customers under pressure. In the short term, the focus is on the half year results for the period ending end October which are due December 12th, to see whether royalty level deterioration is continuing and whether chip volumes have remained resilient despite the global economic downturn. Imagination remains a strong U.K. tech player, but its position probably remains less robust than the ARM holdings powerhouse.
In mid-September, the company’s shares were hit hard by the decision by Texas Instruments, the second-largest US chipmaker by revenues, to refocus away from smartphone and tablet chips. Analysts estimated that the decision would knock an estimated £10m (12 per cent) from full-year revenues. CHART - IMAGINATION TECHNOLOGIES
December 2012
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