UK chip designer Imagination Technologies CEO, Sir Hossein Yassaie, has stepped down amid poor financial results over the last few months.
The CEO’s departure has sparked a company restructure, which will see the firm not only appoint new members to its executive team, but also sell its Pure digital radio division to cut costs.
Shares of the company were down 18% this morning following the CEO’s exit. The company’s market capitalisation has also fallen to £300 million today.
In its last full financial year 2013/2014 (April to April), the company saw revenues of £170.8 million, however, estimates for this year reveal the company to have stagnated with nearly no growth.
Net income has been falling since 2012. In 2014, the company posted £800,000 in net income. For the full year of 2015/2016, net income is expected to fall to over minus £10 million, according to the Financial Times. Net income today already stands negative at minus £23.51 million.
In December, the company reported its results for the six months ending October 31, with Group revenues at £71.1 million, compared to £82.2 million in 2014. Technology revenues were posted at £62.7 million, in comparison to £72.8 million reported in the same period the previous year.
Sr Yassaie said at the time that although the financial performance in the first half has been disappointing, reflecting a short-term slow-down in the overall semiconductor industry and softness in the mobile market, the fundamental medium-term demand drivers remain strong.
The CEO’s resignation with immediate effect comes as the company officially confirmed it expects to report a loss for the fiscal year 2015/2016.
Imagination Technologies said it now aims to reduce operational costs by £15 million in the next fiscal year ending April 2017, by implementing a number of restructuring and cost-cutting initiatives.
One of the measures announced by the company includes the sell-off of its Pure radio business, which was launched in 2002.
The business arm was launched to capitalise on the development of digital radio, selling 5 million radios since 2002.
The company said: "There are potentially more appropriate owners for Pure, given the economies of scale in the consumer electronics market, who will be able to leverage its leading technologies and brand. Imagination will treat the Pure division as a discontinued operation with immediate effect."
The firm will also conduct an internal investigation into the operational side of the business, including R&D expenditure.
On its outlook for the year ending April 2016, Sr Yassaie said: "Given these challenges and the uncertainty, the Board currently expects adjusted operating profit for the year to be below its previous expectations.
"With the significant license deals signed over the last 12 months, the medium and longer-term outlook for the business remains strong."
Today, he said: "It’s now time for someone else to lead this great company. Imagination is now one of the genuine UK-headquartered companies with significant global influence and impact."
Sr Yassaie’s departure comes two months after some controversial claims during his speech at Elektra Awards, when he was awarded with the Lifetime Achievement Award.
He said: "The problem for the UK semiconductor industry is getting companies to reach scale. In the United States, with its many large competitive companies, there is a vibrant, dynamic, industry and a lot of funding can easily be raised. I have several friends there who tell me they could quickly raise $100 million to support their operations.
"I have recently been in China where I met 64 CEOs, of whom several have received funding of $400 million."
He said that he understands the UK could never replicate the two above examples, however, he said the government "lacks a clarity of vision" suggesting that Downing Street could do more to connect big public sector bodies such as the NHS to the semiconductor industry.
Iranian born, Sir Yassaie, 59, entered the UK in 1976, joining Imagination Technologies for the first time in 1992 as CTO.
Sir Yassaie, who was knighted for services to technology and innovation three years ago, saw his company, which employs over 1650 people, fail to adapt to an increasingly modernised smartphone market, which resulted in several profit warning and the collapse in value of its shares over the last few years.