Imagination slips on MediaTek worries

Competition worries have been the bane of Imagination Technologies shareholders. The graphics chip designer has tumbled more than 60 per cent since mid-2012 as key customers such as Samsung spread their risk by licensing rival designs.

The latest worry was that Imagination would lose its monopoly with MediaTek, the maker of processors used in most low-end Android phones. MediaTek is expected to account for about a quarter of Imagination's shipments this year, making it the group's second-biggest customer after Apple.

But the talk at an Arm developer conference last week was that MediaTek "will likely pursue a more aggressive dual-sourcing strategy for graphics," said UBS. "We believe that it will now likely use Arm's Mali graphics in at least 25 per cent of its shipments."

The loss would make Imagination management's target of hitting 1bn units by 2016 look challenging, UBS said. Its analysts had previously expected Apple and MediaTek to provide three-quarters of that target.

UBS set a 240p price target on Imagination shares, which slipped 3.2 per cent to 261.4p.

The wider market was lifted by reassuring results from HSBC and a rally among the miners. The FTSE 100 rose 0.4 per cent or 28.88 points at 6,763.62, with HSBC alone contributing 16 points.

Anglo American, up 2.4 per cent £14.95, piqued interest by naming retired analyst Jim Rutherford, a critic of the sector's poor capital discipline, as a non-executive director. "Investors should feel they now have one of their own on the inside," said Deutsche Bank.

Airlines dropped after Ryanair cut earnings guidance, blaming pressure on fares from stiffer competition. On the post-results conference call chief executive Michael O'Leary set out his plan to undermine Easyjet's advantages by undercutting its rival while adding capacity to city centre airports and improving customer service. Ryanair slumped 12.8 per cent to €5.32 and EasyJet, which has results on November 19, was down 5.1 per cent to £12.30.

A mild profit warning pushed Weir Group 3.7 per cent lower to £21.73. The pump maker said investment in greenfield mining projects had been delayed, oil drilling had been more gradual than expected and industrial orders had dropped sharply because of weak demand from hydro-power generators.

Weir's guidance cut about 5 per cent off 2013 earnings forecasts, though the bigger uncertainly was thether forecasts of a better 2014 could be relied upon. About 10 per cent of Weir's free float has been loaned out to short sellers, down from a peak of about 26 per cent last year.

Aerospace engineer Meggitt lost a further 3 per cent to 493.9p following last week's profit warning, which it blamed largely on operational problems. Analysts were more worried about the future of Meggitt's business servicing private jets.

Ακολουθήστε το Euro2day.gr στο Google News!Παρακολουθήστε τις εξελίξεις με την υπογραφη εγκυρότητας του Euro2day.gr

FOLLOW USΑκολουθήστε τη σελίδα του Euro2day.gr στο Linkedin

"Weak commentary on commercial aftermarket is likely to renew investor concerns over the age of Meggitt's installed base and its exposure to increasing retirements," said Morgan Stanley.

President Energy jumped 16.2 per cent to 33.5p after the explorer hired Schlumberger to begin drilling in Paraguay in the first half of 2014. The company repeated its initial assessment that its licences, which may connect to a producing basin across the border in Argentina, could hold at least 500m barrels of oil.

© The Financial Times Limited 2013. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation