UPDATE 1-Imagination Technologies' profit dips on licensing slowdown

* Year pretax 34.3 mln stg vs 36.8 mln

* Remains cautious on licensing

* Says major customers will not desert Imagination ecosystem

By Paul Sandle

LONDON, June 19 (Reuters) - Imagination Technologies, the British chip designer whose graphics technology isin smartphones from Apple and Samsung,reported lower full-year profits as licensing slows.

The British company, which licenses its designs tochipmakers and receives a royalty on every unit shipped, haslost business it had expected from customers such as TexasInstruments and ST Ericsson as the smartphone marketconsolidates around a few big players.

It warned last month that the shift would hurt licenserevenues this year and next, leading to sharp profit forecastdowngrades from analysts.

"The number of players in that segment has reduced over thelast few months, there have been winners and losers," ChiefExecutive Hossein Yassaie said in an interview on Wednesday.

Its competitor ARM has also been winning marketshare in graphics in smartphones, mobile computers and digitalTVs.

But Yassaie said the company would retain a strong positionin what was still a growing smartphone market, both at the topend, where Imagination is strong, and at the lower end.

Analysts had raised concerns that Apple, which holds a 8.7percent stake in Imagination, could opt for a cheaper chipsetfrom Qualcomm for a possible low-end iPhone, ratherthan designing its own processor.

Yassaie said he was confident that the major smartphoneplayers would stay loyal: "I would be very sceptical of peoplewho believe that customers will change an ecosystem on the backof that sort of issue.

"A lot of our customers have the technology and ability totarget different price points with our technology."

Yassaie is targeting markets like televisions, and, in thelonger term, wearable technology. Its designs are in GoogleGlass, the computer with a display on a pair of glasses.

But for the next year, Yassaie is sticking to guidance oflicensing revenue of 30 million-35 million pounds.

Analysts in May said the forecast indicated that the companywas undergoing more than a short-term blip in licensing.

"We would rather take a cautious approach than be veryaggressive," Yassaie said. "It is possible we do better thanthat, but we stand by that guidance."

Imagination posted adjusted pretax profit of 34.3 millionpounds ($53.5 million) for the year to end-April, down from 36.8million, on revenue up 19 percent to 151.5 million pounds.

Shares in the group, which fell 27 percent after the profitwarning, were trading up 3 percent at 314.5 pence by 1052 GMT.

"Given the weakness of the stock into this update, arguablya set of results in line with the trading update should besufficient to support the stock," analyst James Goodman atInvestec said.