It seems highly likely that the Hertfordshire-based company is now 'in-play'. Ditching its digital radio arm Pure is what investors having been calling for for a few years now, and Shares has also flagged several times why it should, most recently in response to chairman Bert Nordberg's apparent share buying 'vote of confidence'.

But the big shock is that long-time CEO Sir Hossain Yassaie has abruptly walked after an 18-year run in the top job. This presumably shows the scale of a clearly heated debate that has been going on behind the scenes.

Hossain Yassaie

Yassaie always saw Pure as a fundamental part of what Imagination did, time and again expressing a view that R&D spent there could be used elsewhere in a business that has grown out of its core graphics chip expertise into a wider technology gadgets and gizmos designer and engineer.

But fewer and fewer seemed to agree as time went by and Pure losses continued to run a river. In the half year to 31 October 2015, PURE ran up a £2.75 million operating loss on £8.7 million revenues, and this year will be the units eighth-straight of losing money.


Enough is clearly enough, especially when the rest of the business is also having a hard time. Market conditions have not improved since the first half results published on 15 December with uncertainty in China hanging over the semi-conductor and smartphones markets. Royalties from key customers have fallen short in calendar year quarter four 2015 and will do so again in the January to March period 2016.

'The licence pipeline remains strong but deals are slower to close,' says FinnCap's technology analyst Lorne Daniel, meaning that the current year (to 30 April) revenues and profits will fall short, with an operating loss now expected.


Time has now come for a deeper reshaping of the business, and Yassaie obviously feels it's time to let someone else have a crack. This implies £15 million being slashed from the Pure cost base to April 2017, part of its packaging up for sale. About £2 million of that saving will get ploughed into PowerVR graphics chip development.

'There will be a full review of the group over the next few months,' says the FinnCap analyst. 'Cash has been spent on the new HQ and the MIPS processor business and supporting the loss-making Pure, instead of focusing on the core graphics business. It will be a very difficult and slow recovery,' Daniel reckons. That's evident in the near-8% share price slump to 121.5p, a small fraction of the 712.5p highs of less than four years ago.

Audio chips maker Wolfson Microelectronics has gone, blue-tooth chips play CSR has too, both bought out by bigger more resource-heavy buyers in the space of a couple of years. Don't be surprised if Imagination joins them in 2016.

Issue Date: 08 Feb 2016