Apple (NASDAQ:AAPL) Graphic Tech Supplier Warns Of Operating Loss

Apple (NASDAQ:AAPL) Graphic Tech Supplier Warns Of Operating Loss

London firm Imagination Technologies disclosed that its CEO, Hossin Yassaie, is leaving the organization even as the company issued a warning that it might suffer an operating loss this year. Incidentally, the company is a supplier of graphics technology to iPhone maker, Apple Inc. (NASDAQ:AAPL). Apple guided a drop in revenue for the first quarter for the first time in a decade. It is difficult to separate the two events as the British company is heavily dependent on the iPad maker.

Click Here For More Market Exclusive Updates & Analysis

Interim CEO Named

Imagination Technologies named Andrew Heath, formerly a non-executive Director, as its interim CEO. While shares tanked on the London Stock Exchange, the company indicated that it would initiate efforts to reduce its operational costs. For that purpose, it is divesting from its digital radio unit Pure.

For Imagination, Apple is treated as an investor. The company’s business model is to license its video processing and graphics technology to semiconductor firms. Since 2012, it has been struggling to reduce its dependence on Apple. Currently, the company said that the slowdown in the market started in December and persisted due to ambiguity in trading prospects with China. The company the disclosed that there was also a shortfall of expectations for royalty revenue from certain major customers in the quarter ended in October. Aside from that, sales from licensing were also not particularly encouraging.

Slowest Growth Of iPhone Shipments

Apple disclosed the slowest-ever growth of iPhone shipments for the December quarter while its rival, Samsung Electronics also issued a warning on the soft sales of its smartphones. Market conditions appear are hence challenging for Imagination Technologies as it is heading for an operating loss for the fiscal year ending in April.

Analysts were expecting the British firm to report operating profit of £8.85 million. The proposal to divest from Pure is expected to reduce operating expenses by £15 million next fiscal year. Imagination Technologies has been trying to widen its product line by acquiring MIPS processing for $100 million in 2012. However, the acquisition failed to deliver the expected results.