Imagination Technologies is up for sale. No real imagination is required to come up with the reason. The company suffered a rough separation from Apple. For years, Apple purchased Imagination Technologies’ graphics chips. To say having Apple as a customer was a lucrative arrange for Imagination Technologies would be a dramatic understatement. Without any more future sales to Apple, the company last an enormous amount of its worth. To be specific, the company lost about 70% of its worth.
Another serious lesson needs to be learned here. Relying too much on one customer is never a good plan. Once the customer goes, so does all the critical business the seller requires in order to stay solvent. Did Imagination Technologies become too reliant solely on Apple’s business? No one knows the full answer to that other than the executive management team of the company. If this is the case, then there were strategic mistakes made.
That said, replacing a company the size of Apple is not exactly easy. The number of small companies necessary to make up for the loss of a giant Apple account would be enormous. Perhaps Imagination Technologies had no alternative. The firm was left with no option other than to survive and thrive with the good graces of Apple.
Several potential buyers are reportedly thinking about making a bid for the company. How much the bid will actually be is anyone’s guess. A completely devalued Imagination Technologies won’t exactly garner a huge sale price. For those who own it, unloading the company before any more losses are absorbed seems to be a preferable strategy than staying aboard a sinking ship.
What a buyer plans to do with the company once it is purchased is anyone’s guess. Unless the buyer has unique plans for the faltering company’s future, no real point exists to making a purchase.
Dil Bole Oberoi
