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Imagination Tech Shares Collapse 63% as Apple Dumps Chip Maker
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On Monday, graphics chip maker Imagination Technologies announced that one of its biggest customers, Apple Inc. (AAPL - Free Report) , has dumped them. The British company saw its stock, which trades on the London Stock Exchange under the ticker “IMG,” plunge over 70% at one point--shares have recovered slightly, and are now down around 63%--after Apple said it planned to fully stop using Imagination Tech’s products within 15 months to two years.
According to Imagination Tech, Apple has apparently been “working on a separate, independent graphics design in order to control its products,” though the company is skeptical Apple could do so without infringing on multiple patents and intellectual property, or even revealing confidential information. Imagination’s technology can be found in Apple’s iPhone, iPad, iPod, TV, and Watch, and has been used by the tech giant for many years. It wouldn’t be surprising if legal troubles arise in the future.
Over the years, Imagination Tech has basically built a revenue model around its business from Apple. and the company gets about half of its total revenue from the iPhone maker; Apple represented revenue of $75.9 million for Imagination's 2016 fiscal year, is forecast to reach $81 million for the current fiscal year. Apple is also one of its largest investors, holding an 8% stake that it has added to over the years. If Apple leaves, Imagination will see its revenue base be cut by more than half.
And Imagination Tech is not the only company with a “dangerous reliance” on Apple, notes Forbes. You have chip suppliers like SkyWorks (SWKS - Free Report) , InvenSense , and Cirrus Logic (CRUS - Free Report) who depend on the tech giant for over half of their total revenue; even their stocks rise and fall together with AAPL shares. Now, one can only assume if Apple decides to break ties with either of these partners, they could see their stocks crater just as much as Imagination Tech’s.
Currently, AAPL is a #3 (Hold) on the Zacks Rank.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9x stock explosion after they launched their iPhone in 2007? Now, 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade, which could, in turn, save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
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Imagination Tech Shares Collapse 63% as Apple Dumps Chip Maker
On Monday, graphics chip maker Imagination Technologies announced that one of its biggest customers, Apple Inc. (AAPL - Free Report) , has dumped them. The British company saw its stock, which trades on the London Stock Exchange under the ticker “IMG,” plunge over 70% at one point--shares have recovered slightly, and are now down around 63%--after Apple said it planned to fully stop using Imagination Tech’s products within 15 months to two years.
According to Imagination Tech, Apple has apparently been “working on a separate, independent graphics design in order to control its products,” though the company is skeptical Apple could do so without infringing on multiple patents and intellectual property, or even revealing confidential information. Imagination’s technology can be found in Apple’s iPhone, iPad, iPod, TV, and Watch, and has been used by the tech giant for many years. It wouldn’t be surprising if legal troubles arise in the future.
Over the years, Imagination Tech has basically built a revenue model around its business from Apple. and the company gets about half of its total revenue from the iPhone maker; Apple represented revenue of $75.9 million for Imagination's 2016 fiscal year, is forecast to reach $81 million for the current fiscal year. Apple is also one of its largest investors, holding an 8% stake that it has added to over the years. If Apple leaves, Imagination will see its revenue base be cut by more than half.
And Imagination Tech is not the only company with a “dangerous reliance” on Apple, notes Forbes. You have chip suppliers like SkyWorks (SWKS - Free Report) , InvenSense , and Cirrus Logic (CRUS - Free Report) who depend on the tech giant for over half of their total revenue; even their stocks rise and fall together with AAPL shares. Now, one can only assume if Apple decides to break ties with either of these partners, they could see their stocks crater just as much as Imagination Tech’s.
Currently, AAPL is a #3 (Hold) on the Zacks Rank.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9x stock explosion after they launched their iPhone in 2007? Now, 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade, which could, in turn, save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>