Imagination Technologies: When the Apple falls
Shares in Imagination Technologies look set to rally on the open after the company said it is beginning a formal sales process after receiving interest from a number of potential buyers.
No wonder buyers are keen — shares in the group are down around 60% from where they were before the Hertfordshire company stunned the market by saying Apple was pulling the plug on its chip supply deal in little over a year’s time. Apple accounts for about half its revenues and the drop in the share price on the day of the announcement was one of the biggest on record for a mid or large-cap company, wrecking its market cap and forcing it to do all it could to shore up cash.
It was never going to be easy for Imagination Technologies when it lost its biggest customer and efforts to offload two of its three main businesses — MIPS and Ensigma — in a bid to strengthen the balance sheet clearly weren’t enough. These were both strong potential growth areas that could have delivered lasting revenue accretion to offset the loss of Apple.
That was a pretty dire scenario, akin to selling off the family silver to keep the estate going a little longer. Now the shutters are up and a buyer sought. A pretty ignominious end to what was a great British tech success story.
Senior Market Analyst