By Paul Sandle
LONDON (Reuters) – Imagination Tech, the British company whose graphics power Apple's iPhone, warned on profit on Tuesday, saying red-hot demand for smartphones had cooled.
Shares in the group, which has both Apple & Intel on its shareholder register, fell to a six-year low after it reported weak first-half numbers & said it would miss profit forecasts for the year.
Chief Executive Hossein Yassaie called the performance "disappointing", saying it reflected a slowdown in the overall semiconductor industry & softness in the mobile market.
"Partly it is China, yet moreover generally phones are now satisfactory enough that people do not upgrade them as quickly as they used to," he said in an interview.
He said industry forecasts for the semiconductor market had been lowered throughout the year, & analysts now expect 2015 to be flat to slightly lower.
The company swung to an operating loss of 7.3 million pounds ($11.06 million) for the six months to end-October, from a profit of 5.0 million pounds a year ago on revenue of 71.1 million pounds, a drop of 14 percent, with falls in both licensing & royalties.
"The board currently expects adjusted operating profit for the financial year to 30 April 2016 to be below previous expectations," it said.
Brokers on average were expecting operating profit of 14.1 million pounds, according to Thomson Reuters data.
Yassaie said that the medium-term outlook was brighter, citing a new agreement with an unnamed tier-one player in smartphones & increased penetration in automotive & TV markets.
Shares in the group, which had already fallen approximately 35 percent in the last three months, were down 8 percent at 150.25 pence by 1351 GMT.
Analyst Roger Phillips at Investec said the results were "frankly terrible".
"Imagination is no stranger to reporting disappointing numbers, having done so for several years," he said.
But he said at 2.7 times enterprise value over sales, versus a long-term trend of five times, there was value in the stock.
"We remain buyers, given that the steps needed to run this IP-rich business in a financially disciplined way appear obvious â€“ & a catalyst for alter is evident," he said.
($1 = 0.6599 pounds)