Imagination CEO Resigns as Company Looks to Restructure

The chip designer also wants to sell its Pure digital radio businesses as its look to cut $21.7 million in expenses over the coming fiscal year.

Imagination ex-CEO

Officials at Imagination Technologies, which supplies graphics chips to mobile device makers like Apple and has sought to expand its reach into such areas as wearables and the data center, are looking to restructure the company after announcing it will take an operating loss for the year and that its 18-year CEO has resigned.

The British company on Feb. 8 also announced that it will sell its Pure digital radio business as part of a larger effort to cut as much as $21.7 million in operating expenses during its next fiscal year, which will end in April 2017. Of this, Imagination will invest an additional $2.9 million into its flagship PowerVR multimedia graphics engine. Company officials said in a statement that they believe there are "more appropriate owners" for its Pure business, given the size of the consumer electronics space, and that the company will discontinue operations of the Pure division immediately.

Company executives also will review Imagination's entire operations, including how much it spends on R&D.

Imagination Technologies and ex-CEO Hossein Yassaie are the latest victims of slowing iPhone sales at Apple and a struggling Chinese economy. Apple last month announced strong revenue in its fiscal first quarter 2016, but officials said that iPhone sales, at about 75 million units, were flat from the same period the previous year. Imagination, which Reuters reported had seen its share price fall more than 80 percent since 2012, relies heavily on iPhones and iPads for its revenue.

"Trading conditions continue to be very demanding," Chairman Bert Nordberg said in a statement. "We need to be very focused on continuing to meet our customers' needs, and commercializing our IP, cost effectively, based on our core business. The measures announced today will allow the business to maintain the necessary investment in key areas, in order to further strengthen our unique IP, technologies and system solutions."

Royalty returns from some key customers and licensing sales were short of expectations in 2015, and that the company wasn't closing deals as quickly as officials had hoped, they said in a statement. Imagination has enough cash resources to pay its bills, they said.

Andrew Heath, a non-executive director and one-time chief executive of Alent, was named interim CEO while the company finds a replacement for Yassaie. For his part, the ex-CEO noted that over the past years, Imagination has built itself into not only a provider of GPUs but also of general-purpose chips.

"It's now time for someone else to lead this great company," he said in a statement.

Imagination for several years has worked to reduce its reliance on the Apple products by trying to expand its reach into new growth areas. In 2012, the company paid $100 million for the MIPS processor technology, with hopes of extending it into such areas as smartphones, tablets, wearable devices and low-power servers, challenging such players in the chip space as Intel and ARM. At the Hot Chips conference a year later, Yassaie told attendees that Imagination "didn't acquire MIPS for the hell of it. $100 mil is a lot to spend on a company, and our aim is to cover all the markets for which the CPU is relevant."

In 2013, Imagination officials announced the first of the company's Warrior CPU processors, 32- and 64-bit variants based on MIPS' high-performance, low-power RISC architecture that would be armed with such features as built-in support for hardware virtualization, integrated security capabilities and support for APIs for such languages as C or OpenCl.

A year later, Imagination with several other companies—such as Qualcomm, Broadcom and Cavium—launched the Prpl (pronounced "Purple") Foundation, a consortium aimed at taking the low-power MIPS architecture open-source in hopes of accelerating adoption of the MIPS platform for a broad array of devices and systems.