* Year pretax 34.3 mln stg vs 36.8 mln
* Remains cautious on licensing
* Says major customers will not desert Imagination ecosystem
By Paul Sandle
LONDON, June 19 Imagination Technologies
, the British chip designer whose graphics technology is
in smartphones from Apple and Samsung,
reported lower full-year profits as licensing slows.
The British company, which licenses its designs to
chipmakers and receives a royalty on every unit shipped, has
lost business it had expected from customers such as Texas
Instruments and ST Ericsson as the smartphone market
consolidates around a few big players.
It warned last month that the shift would hurt license
revenues this year and next, leading to sharp profit forecast
downgrades from analysts.
"The number of players in that segment has reduced over the
last few months, there have been winners and losers," Chief
Executive Hossein Yassaie said in an interview on Wednesday.
Its competitor ARM has also been winning market
share in graphics in smartphones, mobile computers and digital
But Yassaie said the company would retain a strong position
in what was still a growing smartphone market, both at the top
end, where Imagination is strong, and at the lower end.
Analysts had raised concerns that Apple, which holds a 8.7
percent stake in Imagination, could opt for a cheaper chipset
from Qualcomm for a possible low-end iPhone, rather
than designing its own processor.
Yassaie said he was confident that the major smartphone
players would stay loyal: "I would be very sceptical of people
who believe that customers will change an ecosystem on the back
of that sort of issue.
"A lot of our customers have the technology and ability to
target different price points with our technology."
Yassaie is targeting markets like televisions, and, in the
longer term, wearable technology. Its designs are in Google
Glass, the computer with a display on a pair of glasses.
But for the next year, Yassaie is sticking to guidance of
licensing revenue of 30 million-35 million pounds.
Analysts in May said the forecast indicated that the company
was undergoing more than a short-term blip in licensing.
"We would rather take a cautious approach than be very
aggressive," Yassaie said. "It is possible we do better than
that, but we stand by that guidance."
Imagination posted adjusted pretax profit of 34.3 million
pounds ($53.5 million) for the year to end-April, down from 36.8
million, on revenue up 19 percent to 151.5 million pounds.
Shares in the group, which fell 27 percent after the profit
warning, were trading up 3 percent at 314.5 pence by 1052 GMT.
"Given the weakness of the stock into this update, arguably
a set of results in line with the trading update should be
sufficient to support the stock," analyst James Goodman at