Imagination Technologies Group Share News (IMG)

Shares in Imagination Technologies dropped 12% to trade at 227p early Wednesday as investors expressed disappointment with the group's lull in licensing activity during the period from November 1 to March 17.Imagination, who provides graphics technology to Apple, described licensing activity as a "little muted" since November, attributing the slowdown to "timing rather than any fundamental change in demand"."We currently expect licensing revenue to be close to last year's level with the potential of single digit growth dependent on exact closure timing of the remaining deals," the company said.As such, Imagination struck a confident tone saying that it expects its partners to ship more than 1.3bn chips based on its technology in 2015 and also raised its expectations for growth in shipments of its MIPS embedded microprocessors, now targeting growth of 5% to 10% compared to the previous year.Elsewhere, the group said shipments of non-MIPS units are expected to be in line with its previous guidance, similar to the previous year's level. Shipments of MIPS units were stronger than expected in the fourth quarter and non-MIPS unit shipments increased strongly in the quarter as well.The company said that changes in its consumer electronics division Pure it made in the last financial year are "starting to deliver improved performance in its core markets", and as a result it expects the business to show a reduced underlying loss for the full year.The company also reported that benefits from the stronger dollar - a bulk of group revenues are in US dollar - had been partially offset by the impact of FX movements on its operating costs and previous hedging activities. Imagination added that its underlying operating costs "continue to be tightly managed and are tracking in line with expectations.Broker Peel Hunt downgraded its full year 2015 forecasts by 7% as a result of the flat and low licensing growth in the current year however said that "we believe this is a timing issue, rather than anything fundamental, and follows a pattern of general unpredictability." Peel Hunt added that royalty trends are more encouraging together with the progress in MIPS."The medium to long-term investment case is unaffected by today's miss and on that basis, and given the share price fall today, we retain a buy (rating) and maintain our target price of 270p. The main driver from here will be visibility of the reacceleration of earnings that starts in FY'2016 but which should really gather speed in FY'2017," said the broker.