back to article Not your Imagination: Britain’s other chip giant posts biggest ever loss

The UK’s other chip designer, Imagination, posted a £63.2m loss before tax for the year to April 2016 as it radically restructures its business. DAB radio business unit Pure Technologies, which has been up for sale but with no buyer yet, contributed £7.9m to the loss on revenues of £18m. The IMG Systems services unit is also …

  1. Anonymous Coward
    Anonymous Coward

    going, going...

    Apple are waiting for the fail so they can snap up the bits they want, the IP, then let every thing and everyone else go down the toilet.

    1. Anonymous Coward
      Anonymous Coward

      Re: going, going...

      Apple are waiting for the fail so they can snap up the bits they want,...

      Perhaps. But that would seem a very high risk strategy, since in an insolvency process other buyers might put in a better offer - either private equity houses looking to wring out a much bigger price in a few years time, or a competitor to either Imagination or Apple.

      If Apple really wanted the IP, they'd buy Imagination now in a negotiated sale (so keeping out others), and the total price would be beer money to them. The losses closing down the bits they don't want wouldn't even be a rounding error on the Apple's quarterly results.

      1. Brewster's Angle Grinder Silver badge

        Re: going, going...

        Yes, but they get to purchase just the IP they want without having to pay staff redundancies, fill any hole in the pension scheme, pay off creditors and purchase IP nobody wants (*cough* MIPS *cough*). Maybe they have to outbid a few rivals, but they can afford it, and it will still be cheaper than purchasing the IP plus all that "dead" weight. (With apologies to those Imagination staff I know.)

        1. Preston Munchensonton

          Re: going, going...

          and it will still be cheaper than purchasing the IP plus all that "dead" weight.

          There's no way to know whether this is true without understanding what kind of demand exists for the IP. Given that's only 1700 staff, that bidding war would need to be short to make this true.

        2. Anonymous Coward
          Anonymous Coward

          Re: going, going...

          Maybe they have to outbid a few rivals, but they can afford it, and it will still be cheaper than purchasing the IP plus all that "dead" weight.

          It doesn't normally work like that when selling a company - occasionally it can, generally not. So each bidder doesn't know what the other bidders have put in. The administrators might run a single or two round auction, usually with pre-qualification for the first round.

          Once qualified, you declare your bid, and hope for the best, the administrators take the highest bid. If you lose, and then come back and say "hold on, we'd have given you 50% more" the response will be "we worked for the creditors, you bid X, the winner bid X+10%, if you wanted to own it you should have bid more at the time".

          Fag packet maths says that the costs of a total close down (non-insolvency) would generously be around £70m. From Apple's point of view is that material? I reckon not at all, but they will be happy to let Imagination fail if they think they've got other options - and in that respect they probably have a very good idea of what (if any) IP Imagination have for which there's no alternative.

    2. Anonymous Coward
      Anonymous Coward

      Apple may not need them much longer

      Apple bought up some graphics patents and hired a bunch of former ATI GPU designers a few years ago, and speculation was they were going to design their own GPU core similar to how they design their own CPU core. The fact they have continued to use PowerVR means either:

      1) theirs isn't ready yet

      2) theirs isn't as good as PowerVR yet

      3) Apple hired those people for something other than designing their own GPU or the stories were false

      I think if the answer was 3, Apple probably would have wanted to purchase Imagination. If it is 1 or 2, and Imagination has been notified per whatever contract exists between Apple and Imagination that Apple won't be licensing PowerVR for the A10 (if their GPU is ready this fall) or the A11 (if next fall) that might be the sort of thing that would cause a company like Imagination to begin scrambling to cut costs, cause long time CEOs to quit before their stock options go underwater, etc. - i.e. exactly the sort of shakeups that have been happening with Imagination for the past six months...

    3. phuzz Silver badge
      Facepalm

      Re: going, going...

      Well, lets face it, it's not like Apple have the kind of cash to just buy the whole company outright on a whim. They only made seventy million quid last year, poor dears.

      1. Anonymous Coward
        Anonymous Coward

        Re: going, going...

        70 million? Damn, I need to sell my stock before anyone else figures out their profit has dropped by 99.9%!

        Sure, Apple could buy Imagination, but in doing so they buy their existing contracts so they'd have to keep developing GPUs for the others using them, as well as their other non-GPU product lines. Now it is possible that's why Imagination is slimming down, hoping it will entice Apple to buy them if they were told "we'd buy you if we could get just your GPU IP and engineers, we don't want to deal with these other product lines or your other GPU customers". That's a risky strategy, but Imagination has become so dependent on Apple the last few years that if they leave as a customer they will not survive anyway.

        That's why Apple generally prefers to buy small start ups before they have any products. They don't want to inherit a bunch of other customers, but rather use the company's technology in their own products to differentiate them from other company's products.

  2. Alien8n

    DAB

    Does anyone still buy DAB radios? I remember when DAB first came out I had a DAB radio in the car and it got a good selection of high quality stations (high quality in reception sense, not necessarily content). My current car also has DAB but I find today that both the number of decent stations has diminished and the reception quality is absolutely appalling. Most of the stations are copies of the FM stations and the FM stations are much better reception wise as they don't constantly try to retune every 100 yards. For this simple reason I couldn't justify buying a DAB radio for the home, especially as I can stream to my surround sound from my phone and just get the apps for the stations that I like and stream them over the internet.

    1. allthecoolshortnamesweretaken

      Re: DAB

      Has anyone ever bought a DAB radio? But I digress.

      "However a fall in the overvalued pound after the Brexit referendum could provide a boost for Imagination, as most of its revenues are in dollars."

      That doesn't save you in the long run if you've got a structural deficit. The bleeding slows down, but it doesn't stop.

      1. Alien8n

        Re: DAB

        @allthecoolshortnamesweretaken

        A large chunk of their losses are from the sales of Pure DAB radios, hence my comment. They'd probably be able to save even more by simply shutting down their DAB radio business.

        (I do know at least one person with a DAB radio, but I don't think they ever actually use any of the DAB stations due to issues with reception)

      2. Hans Neeson-Bumpsadese Silver badge

        Re: Has anyone ever bought a DAB radio?

        Twice...

        Once "on purpose" a couple of years ago - tried it for a bit, was massively underwhelmed. It ended up being punted out on Freecycle, for someone else to be underwhelmed by.

        Another time "by accident" more recently, as DAB capability is a standard feature on my new car's stereo system. I thought DAB might have improved but if anything it was worse - in a mobile setting I have the added frustration of going through areas with poor/no reception to interrupt my listening.

        1. Alien8n

          Re: Has anyone ever bought a DAB radio?

          @Hans pretty much exactly the same for me, DAB came as standard on the car when I bought it, but is pretty much unusable due to poor reception. My experience with DAB is very much that it is much worse now than it was 10 years ago. I don't know if that's due to reduced signal strength or inferior car radios.

      3. Anonymous Coward
        Anonymous Coward

        Re: DAB

        That doesn't save you in the long run if you've got a structural deficit. The bleeding slows down, but it doesn't stop.

        Aha, allthecoolnamesweretaken, you're assuming ceteris paribus, and that's not the case. AND you're conflating the government's inability to keep its own spending in balance with tax income - with a much lower exchange rate and the interest implications, they can't dodge the bullet much longer.

        A significantly lower exchange rate won't please the masses, but it is an achievement that almost every other government would give their eye teeth for. Look at Japan, and the failure Abenomics - that's going to end REALLY badly. Look at Italy bailing out their banks to try and pre-empt a bail in (Note for those not paying attention: Bailing-out your banks usually costs tax payers money, a bail-in costs depositors money; by the time of a bail-anything the investors have usually left the scene of the crime).

    2. AndrueC Silver badge
      FAIL

      Re: DAB

      My car has one but I've never used it - I prefer to just let my iPod play through my music collection.

      My bedroom clock-radio is DAB but again I have an iPod docked to it and prefer that as a source. I bought DAB as almost the only way to get a radio-controlled alarm clock (brightness of display was also a factor). Sadly it turns out that DAB time is not very accurate. The clock varies +/- by up to a minute on a daily basis. I did originally think maybe by not using the radio it couldn't get the time but it correctly adjusts the clock for DST so clearly is getting the time from DAB :-/

      Uh huh

      "You may see variances in the time displayed on your radio - but you should never see variances of more than a couple of minutes."

    3. Anonymous Coward
      Anonymous Coward

      Re: DAB

      Of course, only the people with DAB reception problems whinge about DAB. Those of us that are perfectly happy with DAB in our cars tend to be invisible. OK, it's not concert-hall quality, but I'm not in a concert hall, I'm in a car.

      1. Alien8n

        Re: DAB

        @AC as stated, back when I got my first DAB car radio sometime around 2003 I had no issues with reception or station choice. This is something I've noticed since getting another car with DAB in the last few months, but I can't say if the issue is a lower signal strength or with the quality of the car radio.

        1. werdsmith Silver badge

          Re: DAB

          I think you've got a s hit radio or antenna. Signal power was increased after the TV digital thing/ analogue switch off. I was able to use DAB radios at home without extending the telescopic antenna after that. My car DAB is also excellent and rarely loses signal (if it does then it falls back to FM which is also weak and flaky because of the same reception problems.

          UK is a strong adopter of DAB, but is behind Norway etc, other European countries adoption is accelerating.

          Seems its fashionable to run down DAB, but I have my own mind and really like it.

  3. Alan Denman

    Saviour rather than vulture

    There was talk that if Apple bought Imagination then competition board difficulties might ensue.

    I amnot sure about this, unlike for ARM, but stepping in to save Imagination will certainly get less opposition.

  4. 0x407ab506

    The UK did DAB too soon, as a way to sell off spectrum. What it has going for it is radio 6 and world service. They could find room for those on FM. I can think of many less worthy channels.

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