Imagination’s CEO steps down
The company announced a widening half-year loss for the first six months of its financial year back in December and has announced it expects a loss for the full year. The company has also been talking about putting its Pure equipment subsidiary up for sale.
The company blames a slow down in the semiconductor market and lower than expected royalties from key customers but it is Imagination’s high level of exposure to the faltering smartphone market and the rise of rivals, notably ARM Holdings plc, that has cast Imagination into trouble and Sir Hossein out of a job.
ARM – selling Mali graphics cores alongside its Cortex-A series of processor cores – has been able to compete and outsell Imagination in the graphics space even though Imagination is still acknowledged as world-class in graphics with its PowerVR line of GPU cores.
Imagination’s acquisition of MIPS Technologies Inc., an already stuttering US licensor of processor cores, in December 2012 has not produced the turnaround required and if anything validated the use of the comparison of Mali-Cortex from ARM versus PowerVR-MIPS from Imagination, to Imagination’s disfavor.
Sir Hossein joined the company, at that time called VideoLogic Ltd., as chief technology officer 18 years ago. He had previously been with STMicroelectronics, and then oversaw the birth of the IP core licensing market and Imagination’s ability to lead it in terms of graphics processing unit (GPU) cores.
High quality graphics were becoming a primary means of differentiation in consumer electronics and although profits were slow to come the company steadily built its base of licensees. At one point as the economic crisis of 2008-2009 it was obliged to take bail out money from two leading licensees; Apple and Intel (see Apple injects $8.2 million into Imagination and Intel increases stake in graphics cores provider).
Such high-profile clients and backers seemed to protect Imagination and it went on to report profits but it failed to diversify away form the mobile equipment market even though it tried to build positions around MIPS and communications processors. Apple still holds 8.4 percent of the company but Intel sold its stake in 2014.
For now the company continues as a under an interim chief executive Andrew Heath, one of the non-executive directors. The company said it will start the search for Sir Hossein’s replacement immediately and would assess both internal and external candidates.
But a concern of investors is that without the visionary Sir Hossein at the helm, Imagination is a sitting duck takeover target. Indeed, Apple may feel compelled to buy Imagination to prevent loss of control of graphics technology it licenses.
The company said in a statement that it now expects to report an EBIT loss for the financial year to 30 April 2016 and that the sale of Pure and the expectation of reducing operating costs of on-going businesses by £15 million in financial year, ending April 2017.
"Hossein has led the creation of Imagination’s successful IP business model over many years and through his vision and drive, the group has become a global technology leader. His many notable achievements include the development of graphics and video processors for smartphones, gaming devices, TVs and the automotive industry and the introduction of digital radios as a mainstream product," said Bert Nordberg, chairman of Imagination, in statement.
Related links and articles:
News articles:
ARM Closes in on Imagination in GPU Shipments
Apple injects $8.2 million into Imagination
Intel increases stake in graphics cores provider
Has Imagination followed ARM’s lead with Apple license?
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