A failure of Imagination

BRITISh tech-tyro Imagination has been bullied by Apple into taking some bold steps to save itself from the knacker’s yard.

But how wise it is to take on Apple by invoking a dispute procedure that could end up in the courts is debatable.

The US giant is well on its way to becoming a trillion- dollar outfit, having seen its value soar 27pc so far this year to $774bn.

Indeed, even before anyone has seen the next generation iPhone, Apple shares constitute a whopping 15pc of the Standard & Poor’s 500 technology index. With valuations among the big tech stocks heading towards $5 trillion, lifted higher by Facebook’s 47pc revenue boost overnight, the power of Silicon Valley has become irresistible.

When someone suggested to Apple boss Tim Cook that the clunky Apple watch may not have been the great breakthrough hoped for, he shot back noting that with revenues of $5bn to $6bn it could already be in the S&P 500 as an independent enterprise.

All of this illustrates the scale of the task which Imagination (in which I hold shares) finds itself.

Apple is no stranger to patent disputes and has been in almost permanent war with rival Samsung. It even boasts to have gone to court and won against the FBI when the authorities demanded a back door key into the iPhone as part of the inquiry into the San Bernardino killings in 2015.

Imagination has few other choices than to seek remedies from Apple, which is among its biggest shareholders and supplies 50pc of its revenues.

The solution it is proposing to keep itself afloat is to jettison other parts of the enterprise. It wants to sell two promising divisions – the embedded processor unit MIPS and the Ensigma mobile offshoot. When companies embark on panicky sales of key units, you fear the end is nigh.

This was the strategy followed by HMV as it headed for insolvency.

What Imagination really needs now is to sell itself as a whole to smart managers (such as those at engineering group Melrose) who know how to invest in and rebuild underperforming enterprises in double quick time and find a better home for them.

It would be unfortunate if, as a result of ineptitude at the top, Imagination is allowed to embark on a slide to oblivion.

Spanish shadow

FIRST- quarter numbers from HSBC showed a bank prospering in a faster growing global economy. Adjusted profits at £4.6bn for the first quarter were 12pc up and the group’s refocus on its traditional hinterland in China is paying off.

But as so often for the banks, the past continues to haunt. HSBC has been through hell and back in the US because of money laundering at its former Mexico subsidiary. Now the Spanish high Court has moved against it as a result of a money laundering case triggered by the whistle-blower hervé Falciani. he has exposed all kinds of nastiness funnelled through HSBC’s Geneva private bank. Court documents in Spain show that two former heads of private banking, Chris Meares and Clive Bannister, are under scrutiny as suspects. The former chairman of the private bank, Peter Widmer, also has been named.

Meares already has testified before the Commons over alleged tax avoidance by HSBC’s private bank. The Spanish intervention will be a cause for anxiety among investors in the quoted ‘zombie’ insurer Phoenix, where as chief executive Clive Bannister is credited with a good job.

Erasing a rancid decade will be a key task for Mark Tucker when he slides into the chairman’s seat at HSBC in October.

Hat-trick or own goal?

CITY analysts hailed this week’s strong business surveys as evidence the UK will resume strong growth in the second quarter.

‘A hat-trick of strong purchasing managers indexes,’ said the EY Item Club which uses the same model as the Treasury.

‘The sharpest rise in business activity since December 2016,’ according to Markit/ Cips, which collects the data. ‘Good news at the start of Q2,’ say Berenberg. Goldman Sachs calculates Britain is expanding at a sturdy 2.2pc clip.

All of this is somewhat different to how the economy is seen through the lens of the London Evening Standard, now edited by George Osborne who this time last year occupied Number 11.

‘Gloom over mortgages, car sales as inflation hits the consumer,’ noted the headline across a double-page spread. You pays your money and makes your choice.