Apple Raises Stake in Imagination Technologies to 9.5%

[MacRumors]

http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com/2009/06/26/apple-raises-stake-in-imagination-technologies-to-9-5/)

Imagination Technologies has announced (http://www.reuters.com/article/rbssTechMediaTelecomNews/idUSLQ64592720090626) that Apple has raised its stake in the company to 9.5% following recent share purchases. The news comes days after (http://www.guardian.co.uk/business/marketforceslive/2009/jun/23/2) news that Intel has raised their stake in the company to 16%. Imagination Technologies is the company behind the PowerVR graphics chips that are used in the iPhone and iPod Touch.

One analyst notes (http://www.guardian.co.uk/business/marketforceslive/2009/jun/26/1) that this increasing ownership by Apple and Intel can cause some concern amongst competitors who also license Imagination Technologies' hardware:"Too high a stake by Apple or Intel could well cause some existing or potential licensees to think twice about having Imagination's technologies at the core of their roadmaps. We understand that management has already received concerned phone calls from existing licensees."The PowerVR SGX graphics chip used in the new iPhone is responsible for much of the improved performance seen over the previous model.

Article Link: Apple Raises Stake in Imagination Technologies to 9.5% (http://www.macrumors.com/2009/06/26/apple-raises-stake-in-imagination-technologies-to-9-5/)

[z4n3]

End of story

[adamw]

Apple has to protect its interests in the IP of Imagination Technologies. Sounds like they were just upping their share due to Intel's recent raising the amount of its shares.

[BornAgainMac]

Only 9.5%

[John89]

Why not 95%?

[*LTD*]

Apple's being rather careful here.

In fact, they haven't spent a whole lot of their cash reserves. They've been sitting on it for quite a while now.

Why not 95%?

"Too high a stake by Apple or Intel could well cause some existing or potential licensees to think twice about having Imagination's technologies at the core of their roadmaps. We understand that management has already received concerned phone calls from existing licensees."

[bacaramac]

If I had to guess, I would say intel is cashing in on iPhone succsess. Just a thought.

[DELLsFan]

9.5% and people are freaking? Um ... get back to me when they buy 50% or the company outright.

Move along now ... nothing to see here. :rolleyes:

[Zunjine]

I'd say this is more evidence that Apple intend to enter the gaming market in a big way. I hear they really did come close to buying EA recently.

[eastercat]

Unless they get special treatment when it comes to ordering chips, I'm not sure about the significance of the story. :confused:

[iPhoneNYC]

Apple is sitting on so much cash I'm surprised they're no looking for a bigger stake.

[twoodcc]

i don't see the problem with putting more in this company. i don't blame them either

[lamadude]

I don't want apple to buy it up, I like independent innovative companies!
And Imagination technologies were the makers of my first graphics card (back when they were known as VideoLogic) and gave me countless hours of quake II deathmatch fun.
Where is the fun if apple just buys up everything.

[adbe]

9.5% and people are freaking? Um ... get back to me when they buy 50% or the company outright.

Move along now ... nothing to see here. :rolleyes:

Intel up their stake in the company, and Apple respond. There probably *is* something to see here.

Forget the company, and just look at Intel and Apple's actions in relation to each other.

[talkingfuture]

Must be a good vote of confidence for the company that Apple are buying in rather than just acting as customer. I wonder if they will be working on something to go with the produce of the PA Semi buyout.

[locust76]

Apple is sitting on so much cash I'm surprised they're no looking for a bigger stake.

I think buying Imagination Technologies would be a lot like buying 3DFX back in the day. Sure, it might look good now, but nVidia's joining the party. (http://www.nvidia.com/page/handheld.html)

[diamond.g]

I think buying Imagination Technologies would be a lot like buying 3DFX back in the day. Sure, it might look good now, but nVidia's joining the party. (http://www.nvidia.com/page/handheld.html)

Kind of an interesting statement considering Nvidia was the one buying 3Dfx.

I don't think Apple nor Imagination Technologies believes they can beat ATI and Nvidia in GPU power. Nor were their drivers very good.

[DELLsFan]

Intel up their stake in the company, and Apple respond. There probably *is* something to see here.

Forget the company, and just look at Intel and Apple's actions in relation to each other.

::::looks intently:::::

Wow ... that's amazing!

Ok, seriously - aren't there Intel processors in Mac computers now? Aren't both companies making money hand-over-fist? Can't we all just get along? Call me naive, but these companies don't look like rivals. What's Intel going to do? Decide the fate of Imagination Technologies and Apple's iPhone/iPod Touch by upping their stake in this company?

[wizard]

Title says it all, if Intel ends up owning Imagination innovation goes out the window.



Dave

[ivladster]

Well if you snooze you loose. Apple always needs to think of its future. Too bad for companies that only ride on Apple's success and copy everything it does.

[bigwig]

Doesn't a 10% or greater stake trigger an SEC disclosure? If so I can imagine why Apple only upped their stake to 9.5%.

As to Imagination's other customers, I can't imagine Apple would be disappointed if they stopped using Imagination's product.

[adbe]

Can't we all just get along?


I doubt it.


Call me naive, but these companies don't look like rivals.


Not rivals directly, but if Apple makes successful products that showcase a competitor's tech, Intel will logically regard Apple as a problem that needs to be dealt with, even while working closely with them on other products.


What's Intel going to do? Decide the fate of Imagination Technologies and Apple's iPhone/iPod Touch by upping their stake in this company?

Well that's the question. Why did Intel decide to up its stake. It could just be investing in a technology, or it could be moving to buy out a competitor. While I have no idea what Intel are reaching for, my feeling based on their response, is that Apple are at least seeing the move as being potentially hostile.

[wizard]

::::looks intently:::::
...........
What's Intel going to do? Decide the fate of Imagination Technologies and Apple's iPhone/iPod Touch by upping their stake in this company?

Well yeah they could do exactly that. Imagination is key to the ARM SoC market, buy them and anybody designing ARM hardware is dealt a big setback. Regulators might or might not step in so in this regard Apples additional interest in Imagination makes perfect sense.


Dave

[deconstruct60]

Can't we all just get along? Call me naive, but these companies don't look like rivals.


Intel has teams(s) designing CPUs for production and placement in embedded/handhelds.

Apple has team(s) designing CPUs for production and placement in embedded/handhelds.

Is there 100% overlap in their businesses? No. Is there 0% overlap in their businesses? No.

That doesn't mean they can't still be partners in other aspects of the business ( e.g., Apple Microsoft OS biz vs. MS Office for Mac OS
< until recently> , High end HP hardware/OS vs. low end HP hardware/Windows , etc. ). Once tech companies expand out into a broader sprectrum of efforts there is lots of these overlaps. )


What's Intel going to do? Decide the fate of Imagination Technologies and Apple's iPhone/iPod Touch by upping their stake in this company?

How about this scenario.... Intel takes Imagination tech and couples it to an Intel CPU/GPU combo. That's only package they'll sell: a combo of CPU/GPU. So Apple's investment in eventually building their own CPU (which would be coupled to a IMG product) is worth more or less at that point? Intel has never used packaging to help squeeze another player out of the market? *cough* Nvidia.

Besides this can just be a move to get paid on the part of both parties. If Imagination Tech is very successful over the next 2-3 years the stock price could go substantially higher. At that point Apple ( and perhaps Intel ) sell off at a profit ( or the company gets bought out at a high price and they get paid. ) A fraction of both companies multibillion cash equivalents are invested in stocks. All of it isn't stuffed into grandma safe T-bills.



If you look at a three year chart of IMG back in 2007 the stock was higher than it is now. ( iPod halo to some extent. What think a iPod + Palm (Pre + others) halo might look like 2-3 years from now? ). Similarly, IMG can't do a large stock buy back to boost the share price. In some since Apple just did it for them. If that makes IMG a healthier company to deliver significantly better product reliably in the future it pays off. (If Apple says "go do R&D" in this direction... they are going to say 'no' now? )


At 9.5% Apple could press for a rep on the board if they want. That way would get slightly better than normal investor head's up on any buyouts maneuvering. Also have a head start of figuring out if higher counter offer is worth paying for.

Apple doesn't need to buy IMG right now. Nvidia might get dramatically cheaper between now and time they might need to. Right now it is probably best kept independent (from Apple's perspective). This move will help assure that.

[kockgunner]

Why doesn't Apple use their cash reserves to gobble up the company? :D Wait, that would be anti-competitive. How does one do business these days?

[LeviG]

iirc intel took a share due to the use of powervr as the basis of the gma500 which is used in netbooks like the sony vaio p and some new asus models.

Apple is just upping their stake so they can keep a proportionate amount of control against intel

[deconstruct60]

iirc intel took a share due to the use of powervr as the basis of the gma500 which is used in netbooks like the sony vaio p and some new asus models.

Apple is just upping their stake so they can keep a proportionate amount of control against intel

The comments on this article:

http://news.cnet.com/8301-13579_3-10273758-37.html?tag=newsEditorsPicksArea.0

Point toward the fact that a previous significant stockholder in the company is in financial trouble and is dumping blocks to get cash.

http://www.bloomberg.com/apps/news?pid=20601104&sid=aO.XZAxX2LZM

http://www.reuters.com/article/companyNews/idUKB41574520090619?symbol=IMG.L

The Saad Group dumped 5.2% of the company back into the market. ( or possibly into Intel and Apple's hands and it took couple of days for transfers to all clear. ) They could possibly uncork another 7% if things go badly for them for a long time. Intel and Apple are mostly soaking up the excess.

Since, IMG licenses their IP to other folks for inclusion to their chips(for example: http://www.imgtec.com/News/Release/index.asp?NewsID=370) , they are like ARM. Apple needs IMG and ARM around independent so that can lleverage that IP. As long as multiple folks license it the R&D costs are spread out over multiple sources. If the suck it up and make it internal only then all of the R&D costs are borne internally.

[firewood]

As to Imagination's other customers, I can't imagine Apple would be disappointed if they stopped using Imagination's product.

If those other customers are the key to the company being profitable, Apple certainly does not want to scare those customers away. How would you like to report at the next quarterly phone conference that a key investment had gone bankrupt and you had to take a big write-down (loss)?

Furthermore, the key engineers there, working on the next gen IP, might just leave if they thought someone was ready to kill their business.