6th Mar 2014 09:38
LONDON (Alliance News) - Shares in Imagination Technologies Group PLC dropped to near the bottom of the FTSE 250 Thursday, after it lowered its guidance for its royalty units and licensing revenue for the full year ending April 30.
The stock was down 7.4% at 174.56 pence Thursday, the second biggest faller on the FTSE 250 index.
In an interim management statement, Imagination Technologies said that unit shipments of its chips had been below expectations due to a slower rate of smartphone market growth and a lower market share in the entry-level segment of the smartphone market.
However, based on recent design wins and partner product launches, it expects this to recover in the latter part of the financial year 2015.
The company expects graphics royalty unit shipments to be in excess of 1.2 billion for the full year, although excluding products it acquired with MIPS Technologies Inc, it now expects 520 million to 550 million units, below its previous guidance of a range of 580 million to 630 million.
The company said that licensing activity remains high. It expects licensing revenue for the current year to be stronger than the previous year. However due to the timing of deal closures, it expects licensing revenue to be in the range of GBP35 million to GBP40 million. It had previously given a guidance range of GBP38 million to GBP43 million.
Revenue from the company's Pure business has been steady, it said, as its Jongo range of wireless speakers offset a weaker performance in the DAB market. It expects to see the division's financial performance improve in the medium term, driven by the Jongo product range.
Imagination Technologies said it expects underlying operating costs for the financial year 2014 to be lower than previous guidance, in the range of GBP127 million to GBP131 million. It had previously forecast a range between GBP135 million to GBP137 million.
"Our strong technology base and the platforms they are enabling, the expanding partner engagements, and the growing design wins across a broader range of markets give us confidence that we have significant opportunities and growth potential ahead," said Chief Executive Hossein Yassaie in a statement.
Analysts at Liberum said that they expect the reduction in revenue to be offset by this reduction in operating expenses. "Despite negative headlines we don't expect to make very material cuts to our earnings estimates," Liberum said Thursday.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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