Market Report: Switch by Samsung hurts Imagination

 

A decision out of South Korea to use microchips designed in Cambridge rather than Kings Langley in Hertfordshire caused Imagination Technologies to tumble to the bottom spot on the mid cap index yesterday.

Hertfordshire-based Imagination designs graphics processing units (GPUs) that are in the microchips of smartphones. Yesterday it was revealed that it has lost a Samsung contract to  Cambridge-based peer Arm Holdings.

Technology giant Samsung’s new Exynos 5 Octa chip uses Arm’s Mali technology but the previous version of the device used Imagination’s GPU.

News of the Samsung switch, and fears ahead of Apple’s results after the markets closed last night, meant that investors in Imagination lost their nerve and the shares  fell 11.3 per cent – or 32.1p – to 250.7p, a three-year low.

Fears of an Apple sales slowdown hit Imagination because it is its largest loyalty payer. Scribblers at Liberum Capital said: “The loss … plus the slowdown at Apple will drag on Imagination’s future royalty revenue.”

Liberum said Samsung reported that Arm’s technology “boosted” the graphics performance by twice as much, and the chip is set to be mass-produced in August.

Liberum added: “Samsung has tended to switch between IP vendors for different chips. Its return to Arm also shows that Arm’s GPU now matches Imagination in performance terms, having historically trailed Imagination.”

Liberum rates Imagination a hold until there is a clearer picture of its future outlook.  But Arm didn’t manage to take the lead, and declined 8p to 898p.

Across the wider market, the benchmark index was hit by weaker US manufacturing data, and the FTSE 100 declined 25.73 points to 6,597.44.

But miners kept the index from falling further after reports that the Chinese Premier Li Keqiang had said that the Chinese government’s target for China GDP growth would be 7 per cent at the very minimum.

Growth in China is good news for commodities, and it pushed the miners ahead with Glencore Xstrata top of the table, up 13.7p to 282.7p.

Bottom of the table was Tullow Oil. The explorer sank more than 7 per cent when it admitted it had “plugged and abandoned” its “ambitious wildcat exploration well” off the coast of South America.

The dry well in French Guiana accompanied news of a gas discovery in Mozambique. But despite the setback it remained optimistic that it could eventually find oil off the coast of Africa, and said “potential for discovering oil in this region remains after we encountered wet gas”. Investors, however, were unconvinced and the shares fell 73p to 1,041p.

Easyjet plunged 51p to 1,336p after HSBC analysts decided its share price and valuation was “too hot”. Diageo dipped 20p to 2,020p when it got the go-ahead from Chinese authorities to buy the remaining 47 per cent it didn’t already own in the white-spirit joint venture Sichuan Chengdu Shuijingfang for £233m.

Morgan Stanley took a bet online business will become more important for bookies. Its analysts said said they “expect enthusiasm for Ladbrokes’ digital turnaround to increase” and upgraded it to equalweight. They said they preferred William Hill but added that “significant underperformance” at Ladbrokes “could be ending”. Ladbrokes rose 0.9p to 202.3p and William Hill declined 4.2p to 464.2p.

The insurer Beazley fell 17p to 225.7p as it reported a 27 per cent slide in first-half profits because of reduced investment income. Meanwhile, the chemicals group Croda lost 120p to 2,449p as it reported profits up but said Europe was sluggish.

HSBC’s Lena Thakkar is expected a period of strong trading from pubs, which she thinks should benefit from “warm weather, easy comparison figures and a gradual UK recovery”. She raised her estimates for Greene King, which has used the former rugby player Lawrence Dallaglio as its ambassador, and Mitchells & Butlers. Greene King was static at 873p and M&B advanced 10p to 415p.

Buy

IG Group

Snap up shares in the UK’s biggest spread betting group, Investec insists. The broker said IG’s first-half results were marginally ahead of Investec’s forecast and they remain “positive on the stock for both long-term growth and income”. They rate it a buy with a 700p price target for shares that are 582p.

Sell

Sage Group

Flog shares in Sage Group, broker Sanlam Securities suggests. It thinks that despite the trading update being in line with expectations the software group has “low organic growth” and the fact its French and Spanish business “looks tough” means they rate it a sell with a price target of 315p for shares currently at 359p.

Hold

Shore Capital

Hang on to Premier Foods, Shore Capital advises. The broker thinks the food group is continuing the “engineering” needed to turn the debt-laden group around. The  bread- to-cake business reported better than expected half-year  profits yesterday and Shore adds that to “be fair to its management, the focus on simplification is bearing fruit”. But there are issues around its capital structure and scribblers at Panmure Gordon expect that a “£200m equity raise” would be a “rational course of action”. Shore rates the group a hold with a price target of 90p for shares that are 90.25p.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project