MARKET REPORT by GEOFF FOSTER: Imagination hit in selling frenzy

By GEOFF FOSTER FOR MAILONLINE
Updated: 17:18 EST, 4 May 2011

Sellers were all over Imagination Technologies like a rash, dragging shares of the Hertfordshire-based group – whose chip designs are in high-end mobile phones and tablet computers such as the iPad – 29.1p or 6 per cent lower to 468.75p.

Investors ran for the exit following surprise news that chief financial officer Trevor Selby is stepping down at the end of June to ‘pursue personal interests’.

The fact that he will be staying on for the rest of 2011 to ensure a smooth transition cut no ice in the marketplace as dealers feared that he must now be a seller soon of his £2million worth of shares and options.

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Evolution Securities’ technology analyst, the aptly named Philip Sparks, obviously fears the worst. He advised clients to take profits and downgraded from buy to neutral. He said Imagination’s shares since February have outperformed those of Apple, its largest customer, by 50 per cent.

Imagination’s fortunes remain closely-tied to Apple’s, and Sparks believes that the Apple’s mediocre share price performance over the past few months could be the precursor to a period of quiet trading for Imagination’s stock. 

Added to that, the departure of long-standing managers from high flying techno companies is often a clear signal to take profits. Selby is to be replaced by Richard Smith, who was finance director of technology group Acis.

Growing competition concerns and talk that Intel wants to make chips for Apple left ARM 44p off at 557.75p.

The Footsie dropped worryingly below 6,000, closing 98.81 points lower at 5,984.07 after Wall Street shed 100 points in early trading after ISM non-manufacturing and ADP employment data both missed market expectations. Trading conditions in London were already iffy ahead of today’s Bank of England decision on interest rates even though the powers-that-be expect rates will be kept on hold at a record low of 0.5 per cent.

Morgan Stanley’s economic gurus expect Mervyn King and his team at the Bank of England to keep rates on hold until August. It expects to see a significant rise in wage growth and a further uptick in inflation expectations over the coming months.

Antofagasta, 120p down at 1212.5p, led the retreat of miners after going ex-dividend and the 100 cents special dividend payment. Shareholders were also disappointed to hear that copper production in the first-quarter came in at 29,000 tonnes below initial targets making the group slash its full-year target for its Los Pelambres mine in Chile. Reflecting the sharp fall in the silver price, Fresnillo shed 83p at 1514.5p.

On a brighter note, fashion retailer Next lifted spirits in the High Street with a better-than- -expected first-quarter trading update and the shares touched 2353p before closing 97p better at 2319.5p. Marks & Sparks rose 14.5p to 398.85p in sympathy.

Vague rumours of an imminent property revaluation helped supermarket group J. Sainsbury firm 2p to 351.95p.

Over on the other side of the street, the now AIM-listed JJB Sports collapsed 3.25p to 22p. The beleaguered sports retailer was recently saved from administration for the second-time in two years. Investors including activist investor Crystal Amber and Microsoft billionaire Bill Gates voted overwhelmingly to issue more than 160m new shares, pumping £65m into the ailing company.

Shares of IFG Group, the leading provider of self invested personal pensions, soared 28.5p to a 52 week high of 157.5p on news of a bid approach.

Aquarius Platinum shone at 359.15p, up 24.2p, after analysts gave the thumbs up to a deal with Northern Platinum to buy mineral rights adjacent to its Everest mine on the Eastern Limb of the Bushveld complex. The number crunchers believes it makes a great deal of strategic sense and is a transaction Acquarius has pursued for years.

Southern African focused resource company Sable Mining added 0.25p at 21.5p after increasing its exposure to the Springbok Flats Coal Project in South Africa. It has acquired a 70 per cent interest in two highly prospective coal titles within the project area, raising its total attributable tonnage to 938m tonnes of high quality coal.

Stockbroker Numis rose 7p to 112p after an upbeat statement about second-half prospects outweighed news of a fall in first-half profits. Chief executive Oliver Hemsley said the firm has made a good start to the second- half of the year, with seven deals announced in April and a strong pipeline of other corporate transactions.

Still drawing strength from contract news Sceptre Leisure, which provides amusement and gaming machines, rose 5.75p to 25.25p.

- Respiratory biotech company Synairgen added 1.5p at 27.5p after announcing that its interferon beta treatment is showing positive early signs in protecting human lung cells against infection with bird flu. It follows previous news that interferon beta was proving effective against the common cold and swine flu. IFN-beta acts by boosting the body’s host cells’ defences, rather than targeting a particular virus type.