Imagination Technologies, the U.K. company that makes graphics chips for Apple's iPhones and iPads, announced that Hossein Yassaie has stepped down as Chief Executive, as the British company warned it would make an operating loss this year. Andrew Heath, one of the non-executive directors, has been appointed Interim Chief Executive.
Imagination is also announced details on restructuring initiatives. These include the sale of Pure, its consumer electronics business, and the expectation at this stage that Imagination will reduce total operating costs of its on-going businesses by £15 million in the next financial year, ending April 2017.
Since Imagination Technologies published its half year results in December 2015, market conditions have not improved and the slow-down in the overall semiconductor sector has continued, reinforced by global uncertainty about future trading prospects with China.
Imagination said that royalty returns from some key customers have fallen short of previous expectations for the last calendar quarter of 2015 with lower forecasts for the first calendar quarter of 2016.
"While the licence pipeline remains strong, and licences and related revenues already secured this year amount to £24 million, the pace of deal closure is falling short of prior expectations," the company added.
Imagination expects that royalty reduction coupled with continuing uncertainty over licence revenue timing to result in a material reduction in expected FY16 revenues and resulting profitability. The Group now expects to report an EBIT loss for the financial year to 30 April 2016.
Imagination plans to implement a number of restructuring and cost cutting initiatives and plans to sell Pure. At this stage, the company expects to reduce total operating costs of its on-going businesses by £15 million in the next financial year ending April 2017, with a modest impact in the current financial year. Of this, £2 million will be re-invested in PowerVR, further strengthening the company's flagship multimedia product. PowerVR graphics core designs are used by Apple in its iPhones and iPads.