Shares in Apple supplier Imagination Technologies leap as restructuring ends

iPhone
Imagination's graphics chip designs power the iPhone Credit: Bloomberg

iPhone microchip designer Imagination Technologies showed signs that the worst of its brutal restructuring was behind it on Tuesday as it halved losses, despite slowing demand from its biggest customer.

Shares in the Hertfordshire-based group rose by more than 10pc after a combination of the weaker pound and increasing revenues from its wireless chip designs offset falling demand for graphics units from Apple as sales of the iPhone and iPad fell.

Imagination also announced that Peter Hill, the former chief executive of British technology group Laird, had been appointed as chairman. Mr Hill’s appointment marks a reunion with Imagination’s chief executive Andrew Heath, with the two acquainted from their days at Alent, the chemicals giant.

Mr Hill was chairman and Mr Heath chief executive at when Alent was sold to US group Platform Specialty for £1.35bn last year. Imagination itself has been seen as a potential takeover target, with Apple, which owns 8.2pc of the group, confirming earlier this year that it has held takeover talks in the past.

Asked whether Tuesday’s appointment of Mr Hill could lead to a sale, Mr Heath said: “I’m sure people will speculate but we looked to Peter as the best candidate.”

Mr Heath replaced Imagination’s long-time chief executive Sir Hossein Yassaie earlier this year and has sold several parts of the business including digital radio maker Pure, losing around 500 jobs in the process.

Pure radio
Imagination sold the Pure radio business this year

He said on Tuesday that the majority of the restructuring was over as Imagination posted a 6pc increase in half-year sales to £64.4m. Shipments of its PowerVR graphics chips, which are used in the iPhone and iPad, fell by 15pc, but sales were boosted by a strong dollar and higher demand for its wireless networking chip designs.

The company returned to profit on an operating basis but made a £2.6m loss, down from £5.8m a year ago, as the pound’s fall meant Imagination taking a one-off charge on its dollar-denominated debt. Sales are expected to rise in the coming quarter as royalties from Apple reboots amid the launch of the iPhone 7.

Shares rose by 10.1pc to 242.25p.

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