Imagination stock rises on report of Apple talks

March 22, 2016 // By Peter Clarke
Analysis
The share price of troubled processor intellectual property licensor Imagination Technologies Group plc (Kings Langley, England) jumped on Tuesday (March 22) on a report of potential acquisition by Apple.

Imagination's share price jumped about 18 percent from Monday' close and traded on the London Stock Exchange at £2.20 through most of Tuesday.

The report on the ArsTechnica website states that Apple is in "advanced talks" about the acquisition of Imagination, citing unnamed sources. Any interest is likely to be mainly related to the PowerVR line of GPU cores as Apple has used these in its self-designed processor SoCs for iPhone and iPad for many years. Apple has had a minority stake in Imagination since it began working with the company and it stands at about 8.4 percent.

In the last year Imagination has been reporting losses and apparently losing out to rival ARM Holdings plc (Cambridge, England). To address this the company has announced staff cuts and founder and long-time CEO Sir Hossein Yassie resigned from the company in February (see Imagination's CEO steps down ).

ARM – licensing Mali graphics cores alongside its Cortex-A series of processor cores – has been able to outsell Imagination in the graphics space even though Imagination is still acknowledged as world-class in graphics with its PowerVR line of GPU cores (see ARM Closes in on Imagination in GPU Shipments ).

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 comparison of Mali-Cortex from ARM against PowerVR-MIPS from Imagination.

Any acquisition of Imagination by Apple will likely hinge on two things: what is to be done for other licensees of PowerVR cores and how to dispose of the MIPS and Ensigma product lines for which Apple may have little use.

It seems unlikely Apple would embrace a core IP licensing business model and so other existing licensees of PowerVR GPUs may be forced to switch to another licensor of GPU cores, such as ARM.

Related links and articles:

www.imgtec.com

ArsTechnica report

News articles:

Imagination's