Any ideas why price has decreased so dramatically recently?

3 April 2017

Imagination Technologies Group plc

Discussions with Apple regarding license agreement

Imagination Technologies Group plc (LSE: IMG, "Imagination", "the Group") a leading multimedia, processor and communications technology company, has been notified by Apple Inc. ("Apple"), its largest customer, that Apple is of a view that it will no longer use the Group's intellectual property in its new products in 15 months to two years time, and as such will not be eligible for royalty payments under the current license and royalty agreement.

Apple has used Imagination's technology and intellectual property for many years. It has formed the basis of Graphics Processor Units ("GPUs") in Apple's phones, tablets, iPods, TVs and watches. Apple has asserted that it has been working on a separate, independent graphics design in order to control its products and will be reducing its future reliance on Imagination's technology.

Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination's technology, without violating Imagination's patents, intellectual property and confidential information. This evidence has been requested by Imagination but Apple has declined to provide it.

Further, Imagination believes that it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights, accordingly Imagination does not accept Apple's assertions.

Apple's notification has led Imagination to discuss with Apple potential alternative commercial arrangements for the current license and royalty agreement.

Imagination has reserved all its rights in respect of Apple's unauthorised use of Imagination's confidential information and Imagination's intellectual property rights.

Down by two thirds! WOW !!

Must be worth a punt Yes ? No ?

ouch!
i've got some of those in my sipp

=============

good idea chess, but sp has now zipped away from 105 which was the level i was looking for

Blimey, eggs and baskets spring to mind regarding their tie up with Apple.. be very careful about these Alf.. one of Dili favourites if I'm not mistaken )-:

Comment from J P Morgan:
"Apple is by far Imagination's most important customer and responsible for the majority of its revenue. The information that it will not use Imagination IP after next 15-24 months is potentially fatal for the company and the only rescue would be a distress sale. In fact, we think it virtually impossible to build a model for the company without Apple revenue. Thus though the fall in the stock post the announcement is substantial we find it difficult to value the company without Apple revenue and the company will likely have to effect a distress sale in the current environment. The options in front of the company include: 1) Sale of graphics IP to Apple. 2) Sale of right to use graphics IP to Apple while continuing to maintain its own graphics IP business to other customers along with its MIPS and Ensigma businesses. 3) Break up and sale of all the businesses of the company. Only the graphics IP would today get proper value, though breaking up the assets could potentially generate some more value than that reflected in the stock today after the announcement, though the cost will be in terms of how long this break up takes to execute."

UBS comment:
Scenarios (1) and (2) - the status quo and the re-pricing
The first scenario would be Apple continues paying royalties at rates similar to history which is the assumption behind our last published price target of 270p (now under review).
The second scenario would be the royalty rate is renegotiated lower. We estimate that Apple currently pays IMG around c$0.30 royalty per device. In FY19E, as long as any renegotiated royalty rate remains above $0.11 we estimate IMG would remain profitable (before stock comp) under the current business plan (i.e. rising investment in PowerVR and gaining other customers). Placing a value on this scenario is tough but assuming $0.11 royalty rate and growth elsewhere to restore profitability (to 20%/30% EBIT margins long-term), our DCF model suggests a value of 90p/140p, assuming all else being equal.
Scenario (3) - what if IMG is not successful
If IMG is not successful in generating revenue from Apple of some form longer-term, we estimate the business would be loss-making by c£22m (before stock comp and based on our assumptions still holding for the rest of the business) and would need to investigate either: 1) the cost base; 2) gaining significant new business or 3) finding another way to generate value from the IP (we note that the MIPS patent portfolio was sold for $350m). Valuing this scenario is highly challenging in our view but positively we estimate IMG reaches a net cash position by end of FY18E."

perhaps i wasn't too smart buying a few to trade at 103.5
oh well ..... fingers x'ed for some bear closing to bank profits

lucky alphonse!
while i was out and about, my limit at 107 was hit so walked away (undeservedly) with a profit of 3.5p a share

80P at one point !!!!

lower than that earlier in the day :-)

Good call, cynic. 98p now.

with hindsight, just bloody lucky to escape with any sort of profit

You're a brave man, cynic.

Jefferies International today downgrades its investment rating on Imagination Technologies Group PLC (LON:IMG) to hold (from buy) and cut its price target to 95p (from 219p).

Credit Suisse comment:
Upgrade from UP to Neutral, TP lowered to 100p. Post the announcement around Apple moving away from using IMG graphics to its own independent solution, we now assume Apple contribution (~50% of IMG group revenues in FY17) to decline by 60% in FY19 (year ending Apr-2019) before falling to zero by FY20. Small part of this would be offset by design wins at Spreadtrum and in areas outside of Mobile, but this would imply that IMG sales will decline from £136mn in FY17E to £80mn by FY20E, making the EBIT profit of £26mn in FY17E turn into £24mn loss by FY20E. With Apple risks now having played out (something we have been flagging recently, although we only expected scoping down of existing agreement), we believe there could be some interest in IMG assets (graphics technology, IP and patents). As such, we upgrade to Neutral with TP of 100p (down from 180p).

more like a damn fool hyleo, though this time i got away with it
i still have my sipp holding

JP Morgan Cazenove today reaffirms its neutral investment rating on Imagination Technologies Group PLC (LON:IMG) and cut its price target to 95p (from 250p)

Final results http://www.moneyam.com/action/news/showArticle?id=5579086

SUNDAY MAIL

Row between British tech star Imagination Technologies and Apple set to intensify after unveiling of new iPhone - By Matt Oliver

The row between British tech star Imagination Technologies and Apple is set to intensify after the Silicon Valley titan unveiled the new iPhone model to millions of fans.

Revealing the iPhone X on Tuesday, bosses at Apple boasted their ‘most-powerful’ new A11 Bionic chip – which acts as the phone’s brain – was their first-ever such chip designed in-house.

But the A11 appears to contain some key Imagination technology – setting the stage for a further showdown between the companies after a bitter fall-out.

Phone wars: Imagination made chips for all of Apple¿s phones until it was ditched earlier this year


Imagination made chips for all of Apple’s phones until it was ditched earlier this year and told royalties would be wound down, with Apple deciding to make its own chips.

The loss of its main client sent Imagination’s shares into freefall, wiping £500m off its value and forcing bosses to put the company up for sale.

Hertfordshire-based Imagination has threatened legal action and insisted it would be ‘extremely challenging’ for Apple to design its own chips without using Imagination’s technology somewhere along the line.

Analysts at Numis speculated they do expect Apple to have to pay royalties to Imagination for technology in the new iPhone, despite Apple’s boasts about it being its own work.

Numis said: ’It is noted on Apple’s developer website that the A11 GPU uses a key Imagination-patented approach called tile-based deferred rendering, which would indicate it will be a royalty-bearing chip.’ Imagination claims Apple admitted to working on its own version of key chip technology while still collaborating with its British partner.

It also emerged Apple poached several staff, including engineers, managers, its chief operation officer, a head of hardware and a leading designer.

Philip Schiller, Apple’s senior vice president of worldwide marketing, said on Tuesday that the A11 Bionic chip contained the ‘first-ever Apple-designed GPU’. He added: ‘This is a breakthrough performance in a mobile device. There has never been anything like it.’ All of the new features in the iPhone X were also powered by the Apple-designed chip, Schiller added.

Imagination declined to comment. Apple declined to comment on the new iPhone X but said: ‘We began working with Imagination in 2007 and stopped accepting new IP from them in 2015.

‘After lengthy discussions we advised Imagination on February 9 that we expected to wind down our licensing agreement since we need unique and differentiating IP for our products.’

Nov 2017
StockMarketWire.com
The scheme of arrangement for the recommended cash acquisition of Imagination Technologies by CBFI Investment, a wholly-owned subsidiary of funds managed by Canyon Bridge Capital Partners, has taken effect.
Scheme Shareholders on the register of members of Imagination at the Scheme Record Time, being 6.00 p.m. on 3 November 2017, will be entitled to receive 182 pence in cash for each Scheme Share held.