Is Apple KILLING Its Own Supply Partner?
The future of one of Apple’s (NASDAQ:AAPL) supply partners may be in trouble because it has been too devoted to the iPhone maker. The shares of the British based Imagination Technologies, which makes graphics and video processors for smartphones and tablets, have been falling over the past few months, and dropped another 10 percent on Tuesday despite the firm reporting a 53 percent jump in annual profit.
The concern is that Imagination does not have enough variety of customers to reach its target of shipping 1 billion chips by 2016. Apple, which holds a near 9 percent stake in the company, is estimated to account for 53 percent of its royalty units and an even higher percentage of royalty revenue. While sales of Apple’s iPhones and iPads have been booming, analysts are worried that the supplier is overly reliant on one customer. Shares in Imagination have fallen 30 percent over the past two months as rival ARM Holdings (NASDAQ:ARMH) also increases pressure.
The firm announced the total number of chips shipped with its graphics and video technology by partners including MediaTek grew to 325 million. And according to chief executive Hossein Yassaie, the company is also working on trying to sell into new markets, targeting lower-priced mobiles and smart TVs. It is also hoping to make the most of the launch of Microsoft’s (NASDAQ:MSFT) new Windows 8, which could add to its window of growth opportunity.
Imagination, which also makes “Pure” branded digital radios, posted adjusted pretax profit of 36.8 million pounds ($58 million) for the year ended April on 30 percent higher revenue of 127.5 million.
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