Imagination Tech Warns on Profit as Smartphone Market Softens

Imagination Tech, the British company whose graphics technology powers some Apple devices, warned on profit on Tuesday, saying it had been hit by a slowdown in semiconductor and smartphone markets.

The company swung to an operating loss of 7.3 million pounds for the six months to end-October, from a profit of 5.0 million pounds a year ago on revenue down 14 percent, to 71.1 million pounds, with falls in both licensing and royalties.

Chief Executive Hossein Yassaie called the performance "disappointing", saying it reflected a short-term slowdown in the overall semiconductor industry and softness in the mobile market.

"The board currently expects adjusted operating profit for the financial year to 30 April 2016 to be below previous expectations," the company said.

Brokers on average were expecting operating profit of 14.1 million pounds, according to Thomson Reuters data.

Shares in the group, which had already fallen about 35 percent in the last three months, were trading down 8 percent at 150 pence at 0809 GMT.

Broker Jefferies, which has a "buy" rating on Imagination, said it would cut its forecast for full-year adjusted operating profit by about half, and bring its 2017 estimate down as well.

It now forecasts earnings per share for the year of 2.8 pence, down from its previous prediction of 6 pence, the same level the company produced last year.

© Thomson Reuters 2015