Market Report: Imagination tumbles after blow from TI

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The Independent Online

It has been said that when America sneezes, the rest of the world catches a cold. British chip maker Imagination Technologies was left snivelling and shivering yesterday after its US partner Texas Instruments revealed its intentions to bow out of the competitive smartphone sector.

FTSE 250 member Imagination tumbled 50p to 470p – a 9.62 per cent drop – as scribes at Investec calculated that Texas's plan could mean Imagination could take a £10m hit.

Texas revealed at an investor conference in the States that it will refocus its investments into markets such as car makers rather than making chips for smartphones and tablets.

But Investec said Texas's statement "lacks clarity" and kept its buy recommendation for Imagination shares, but will place its target price under review.

Imagination's shares over the long term have served investors well. Steadily rising since the end of 2008 when they were 62.50p, they reached a high earlier this year of 717p. But the Hertfordshire-based group, which designs the graphic-processor units in many varieties of smartphones, has come under pressure to reduce its dependency on supplying Apple, which is also one of its shareholders.

It wasn't the only chip maker to suffer. On the FTSE 100, fellow Brit tech firm Arm Holdings also fell back 19p to 566p.

There was better news on AIM for Oxford Advanced Surfaces. It said it was making "good progress toward commercialisation" of its anti-reflective technology for tablet and smartphone screens and shares ticked up 1.25p to 11.12p.

A wave of depression engulfed the City as traders let the worsening eurozone situation get the better of them. Civil unrest escalated in Spain and Greece and uncertainty over Spain's acceptance of the terms of a bailout sparked a sell-off across Europe. The FTSE 100 tumbled more than 1.5 per cent as US data on falling new home sales added to the morose outlook. The FTSE 100 sank 91.62 points to 5,768.09.

Despite the melancholy, some traders found the energy for takeover gossip. Vague whispers that private equity firms are eyeing National Grid circulated. But the shares did not respond and were left down 2p to 691.5p.

Miners' and bankers shares suffered as investors' previous passion for risk disappeared. Anglo American's 80 per cent-owned Anglo American Platinum said it will start "disciplinary action" if miners at its Rustenberg operations in South Africa do not return to work. Anglo American retreated 69.5p to 1,831p. The strife-hit region's latest casualty is AngloGold Ashanti. The third-largest gold producer by sales said it has been forced to stop work due to strikes.

Despite the lack of confidence, analysts at Exane BNP Paribas still think the FTSE 100 is "appealing". Exane's Ian Richards said: "Even after the summer rally we still see appeal. Addressing a common investor concern, we show that after controlling for composition changes over the last decade, the market is still trading 'cheap' relative to history."

Almost two years after four Russian oligarchs threw a giant spanner in the works of BP's Arctic ambitions, the foursome are back.

This time the talk is they want to buy BP's entire 50 stake in TNK-BP – the half they don't already own. Alfa Access-Renova (AAR) – the consortium that represents Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik – had offered to buy a 25 per cent stake for $10bn (£6.1bn) but rumours emerged that they plan to up this offer.

The bid is a further complication for BP's Arctic assault. It is designed to outmanoeuvre Rosneft, which has already offered to buy BP's stake and has begun raising up to $15bn ($9.3bn) of debt to finance a cash-and-shares deal.

BP has been pursuing a deal with Rosneft to achieve its planned expansion into the Russian Arctic. A deal with Rosneft would see BP sell its stake in TNK-BP in return for a stake in state-owned Rosneft. The news hurt BP's share price: it lost 7.65p to 438.35p.

In January 2011 legal action from AAR forced BP to abandon the original proposed joint venture and share swap with Rosneft. AAR has until mid-October to make a formal bid. After that the deal could be opened out to other suitors.