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Author Dave Sweeney     View Profile     Add to favourites     Ignore
Date posted 2009-08-15 10:57
Subject My AGM report :-) 
Opinion Strong BUY
Votes for this Posting Voted UP 55 times.
What a Great day , once again it’s impossible to convey how good and informative an IMG AGM IS unless you have been there - the internet slide presentation helps but the real tangible benefit’s of attendance cannot be overemphasized.

This year’s meeting had a real upbeat feel to it especially after the reversionary/credit crunch feeling to the 2008 AGM , real evidence of IMG’s progress was there for all to see and many of the long term question’s did not need repeating as answer’s were already obvious .It was again a delight to meet old friend’s at the meeting - too numerous to mention and thanks Susi for your organization , dedication to share holds and entertainment post meeting

Unfortunately due to a family illness The Chairman Geoff Shingles was unable to attend and the Senior Non-Executive Director Ian Pearson chaired the meeting .There was a good attendance and as always we were all well looked after before and after the meeting , the lunch was superb and The CEO CFO and all the Director’s AND SENIOR technical and sales staff were available for discussion after the formal meeting - these informal discussions are usually the highlight of the day for me . During the Q+A I complemented the Board and Staff on the year’s performance and the fact that there it is so nice to see the same people every year , I reconfirmed that personally and collectively many of us had bought into the ‘vision’ of the company as highlighted by the CEO in years gone past and that we can now see that this vision is indeed turning into reality .I have to say that I did qualify my gratitude by suggesting that at times being an IMG investor was akin to a visit to the dentist for a root filling without an anaesthetic ;-) this raised a chuckle from the board and other’s.

I have to say that it was a delight that the CEO literally has to be dragged into the board meeting late in the afternoon- he seemed far happier chatting to myself and Naweed (Primitive) in the then empty room! ALL the other Director’s and staff were equally keen to answer as far as they could investor’s questions. The sheer dynamism , drive , dedication and enthusiasm of the CEOis a joy to behold all fronting a huge intellect , I have to say that I continue to rate him as one of the most impressive persons I have met and I have been lucky in my life , career in medicine , business and research to meet many gifted people and he is a bl**dy nice bloke as well .He reiterated that he could be earning a huge salary elsewhere (this is a fact folks) but he will stay and lead IMG until his aim’s and aspirations are satisfied - he has VERY HIGH TARGETS folks J

Right to some observations- I have to say that as usual we were able to glean a few really interesting facts that I CANNOT report on - you have to get to the AGM folks , but take it from me things are going really well at HQ , one has to respect the request the confidentiality


Paul Smith head of Pure and a delightful chap seemed really upbeat especially after last years doom and gloom caused by the credit crunch , he had predicted the difficulties PURE would have with the double whammy of the weak £ and retail woe’s - it has to be said that key retailer’s shot themselves in the foot last Xmas by ultra conservative product orders and this did not help PURE who could have sold many more unit’s if the retailers had been braver. It appears that sales and order’s in the 1st quarter of this FY are reflecting the previous quarter and are looking healthy , the relative strengthening of the £v$ is helping and PURE have decreased costs and increased margins by effective management , this combined with the start of a boom in export sales led by Switzerland and Australia and shortly to be followed by Germany and France is making PURE look like a very tasty business indeed .

Presently 20% off PURE sales are EXPORT - by 2012 Export sales will outnumber UK sales J

There will be a range of new products announced at IFA in Germany in 3 weeks - we were able to see a few in the Pure demo room but not all - we will have a new Siesta bedside radio with I-pod docker- neat- also a Siesta Flow with internet functionality , a new re-branded and remodelled Chronos I-pod docker as well a new Chronos CD player - the new models are re-engineered with far better sound quality and the Siesta will be louder. Colin Crawford PURE retail manager was once again very helpful and informative - what a nice man he is.One new product was out for a photo-shoot for I believe What Hi-Fi magazine and I forget it’s name

The BIG product which Pure are launching Pre-Xmas is project Junior (wonder what the trade name will be ?)- this will be a major launch and be very special indeed - it will incorporate a nice size touch-screen , push to buy facility , be a connected product - it will enable many other functions both as a single product and within a ‘connected home’ - the possibilities of this product and it’s future ‘family’ of products are frankly almost unbelievable - example - the screen could be ‘connected ‘ (wirelessly of course) to security camera’s or a child baby alarm or one could do internet banking and shopping on the device (can it any longer be called a radio?) whilst downloading that favourite track that is playing on it or perhaps listening to a pod cast ?? Whilst checking the kid’s are safe and asleep upstairs!! - some might say is all this necessary - I would say this is the FUTURE - embrace it and our company that is at the cutting edge of this new world order of technology. We were NOT able to see Junior - it’s highly secretive stuff - bribe’s were refused J - it’s all cloak and dagger stuff and very exciting.

Key retailer’s have seen the new product range and are very impressed and have been blown-away by Junior !! Interestingly PURE are able to leverage retailer’s with their new product’s and this for me is very important- what do I mean by that ?- well retailer’s want to cut cost’s and delay payment’s - that is the nature of sales , PURE are in such a strong position with product that they can counter such demands in a quid-pro-quo scenario by ‘suggesting ‘ to retailers - “well if you want to do that OK BUT that means we will not sell you Junior or our new connected products that the retailer KNOWS will be a good seller” - that’s pretty effective in sales discussion’s J

I suspect that since retailers will already be ordering Xmas stock PURE will have a good idea of upcoming sales although it is of course impossible to predict what is going to happen to happen - the CEO and Paul Smith seemed so happy with the business and a literally exploding export market that I PERSONALLY would be astonished if PURE do not make a profit this FY

Technology and Partners

ALL very exciting and dynamic .
The relationship with KEY partner’s especially those that are also Investor’s goes from strength to strength , The CEO could not be happier with the relationship which he believes is still in it’s infancy.

Some key points NOT on the slides

ALL the company’s shown are ACTIVE partners - redundant licensees AND SOC’s do NOT feature on the stat’s and slides - all that are shown are actively engaged with IMG , so Licensees such as Sunplus , SIE etc that we have not heard about are still active - great news

Barriers to entry for new IP companies are increasing and IMG is in the UNIQUE position of being able to provide a complete IP block for partner’s SOC’s - the importance of this cannot be over-emphasized. IMG can provide the CPU(Meta) GPU(SGX) and The Comms(UCC) , other IP companies who are ‘niche’ player’s in any of these area’s will have real difficulty competing against IMG .

IDMs (independent device manufacturers) are entering into a new phase that is massively favouring IMG , there is a worldwide REDUCTION in SEMICONDUCTER companies that have a fabbing ability , indeed The CEO suggested that within a few years the ONLY fabbing Semi companies could/will be ? be Intel Samsung AND The combined Renesas/NEC! Everyone else will be fabless - this is VERY GOOD for IMG.

The importance of software was emphasized- OEM’s and Licensees do NOT want to change hardware architecture - it’s massively expensive to do - hence the key investment once the hardware is decided on is in software and software Engineer’s - the ratio of engineers Software to Hardware is now approaching 5:1 - what does this mean for IMG ??? - well it’s GREAT news due to the stickiness of it’s IP and sheer ability of it’s low-power Hardware functionality a customer will NOT want to embrace other technology - it’s far to expensive to do and almost impossible to do in-house - SPLENDID -

The Other key Industry Mega trend is the concept of Universal Internet connectivity even in ‘simple’ devices and guess what folk’s IMG is able or is shortly going to be able to provide the ip to do just about everything that is required ,this is where the very exciting partnership with Toumaz comes in - I do not have enough time or space in this post to detail the possibilities of the potential for the product’s that Toumaz and IMG will produce but in the healthcare area alone ‘monitoring’ devices WILL generate huge revenues and enable physicians to better care and supervise treatment for patient’s ( I have some expertise in this area and believe me especially in the USA this IS going to be massive) -the fielded of Home Automation and smart metering has not begun but I was convinced by the CEO that in the near future especially with GREEN ENVIROMENTAL and ENERGY SAVING Issue’s at the forefront of political agenda’s most of our energy using devices WILL be monitored for cost saving and efficiency - IMG WILL be at the forefront in this new arena of technology.

The CEO signalled out Toshiba Qualcomm Broadcom and Panasonic as key target’s as new licensees

The Battle Royale for supremacy in Consumer Electronics in a ‘connected world’ is presently being fought by the major players and the losers will be confined to oblivion - the battle for the consumer’s is being led by Apple and Google the importance of the Apple effect is that the UI (user interphase) which was and still is very important has been superseded by the key pivotal concept of APPLICATION DELIVERY as demonstrated so effectively by The Apple Apps store and it’s huge success.

Folks- in order to provide an effective Application store ‘anywhere’ be it on a phone or a TV or indeed on Junior J HD video and graphics is all important - shortly our TV’s / computer’s Gaming devices WILL all be seamless and dependent on hardware that provides functionality driven by amazing software - IMG are in on the ground here and if the stickiness of the IP MBX and now SGX AND video in mobile wireless and now MID/PMP is anything to go by our relationship with Intel (Canmore , Sodaville Moorestown, Pinetrail) it would appear the future is very rosy indeed


Iask’d the key question re MBX v SGX and my prediction of an SGX royalty rate being x 2.5 that of MBX was pretty accurate - The CEO stated that the difference was x2.5-3.0 - GREAT

SGX royalties will outnumber MBX royalties by Xmas THIS YEAR - since royalties are paid 3 months in arrears I guess this means that from October 1st more SGX will be shipped than MBX - just in time for Xmas

IMG are totally confident of the 200million target for4 the 2010 TIMEFRAME - quite frankly I reckon that they think it’s a GIMMEE already !!and they are more concentrating on the 500million target - they wont say what the timeframe is for that - my guest mate is 2012 - yes that early! Buts that’s from me folks

The CEO and CFO stated that the average royalty rate per chip at a volume of 200million would average approximately 30cents (remember that as volume goes up rates go down and the 30cents reflects the rate then NOT now) for this year there will of course be a significant increase in royalty rates per chip despite increasing volume due to the replacement of MBX by SGX and the phase out of the legacy agreement with ARM

Demo Room

To be seen to be believed -defies description so I won’t try! the year on year improvement is astonishing and IMG’s bright young ladies and men are so helpful and informative and obviously are motivated and PROUD and energized about what they are doing- a joy to behold

Series 6 and SGX cores

I asked the CEO about Series 6 - are you working on it - when will it come out etc etc?? the answer was better than I could ever have imagined

Yes Indeed Series 6 is being engineered - it HAS been shown to Intel and Apple J

It WILL slaughter (the CEO’s words not mine) all opposition when it is released - the CEO said that competitors are way behind IMG in capability and when they do eventually do catch-up (if ever) Series 6 will be the equivalent of the boxing KO or knock-out blow .It is a TOP to bottom solution - you work that out J!!.SGX 543 multi-core series has only just been introduced and IMG now has about 10 solutions for vendors to choose from so there is no immediate need to introduce Series 6 - now for me it’s difficult to imagine how series6 is going to be that good ?? But the CEO is totally confident and said that what we have seen “so far” is just the start!!! Of what IMG can do - he was smiling like a Cheshire Cat as he was saying it and since Apple and Intel have seen it one suspects that these relationships are in their infancy as well .

Not only is the relationship with the investors good , things are going very well with other licensees and I was very pleased indeed for the CEO to be well pleased with the growing real and great relationship with Samsung and TI

For those of you who recently commentated on the ‘driver issues with The Z-Atom - these have been sorted - I will NOT go into why the difficulties arose as these are confidential but suffice to say the solution has STRONGLY reinforced the relationship and the respect that Intel have for IMG - you work that out


The CEO OR other staff would not reveal which major CE brand is using the NEC Emma HDTV chips with IMG IP but he did say that if you went into a TV shop and watched football on the screens it would be pretty easy to work out which we were in - it’s obvious that worldwide many TV’s are now being shipped with our IP.

Well I have done that folks and this is from me not IMG - if you are going to buy a TV make it a Sony Bravia Engine 3 with motion flow 200 J to be sure .

Finances and acquisitions and relationships

IMG are very happy with their cash balance of circa £20million- CFO and CEO stated categorically that they believed that was the sort of figure necessary for the company , I asked about a possible acquisition as mooted by the recent Electronic Times Article after an interview with The impressive Tony King-Smith - it would appear that a 2 hour long interview was condensed to a 2 minute segment and that the subject of an acquisition has been frankly over exaggerated - certainly IMG are looking to strengthen their software side but would only consider an earnings enhancing deal that would not stretch the company finantially.It is interesting that despite the credit crunch IMG currently has about 70 vacancy’s for Engineer posts.

The relationship with ARM is good and the CEO meets up with his counterpart at ARM Warren east quarterly - however IMG still dismiss Mali as a very inferior product - ARM and IMG work closely together with Apple and it is both their interests to maintain a strong relationship.

I am starting to waffle now so will close this missive shortly with the observation that the AGM totally reinforced my belief in this dynamic exciting company . It has been a hard painful journey at times but the vision is becoming reality .

September is likely to be a great news flow month for IMG.

IDF from Intel and a flood of news about Canmore Sodaville Moorestown launch and Pinetrail- the all important new SOC as far as I am concerned and now totally confident we are in.

Almost inevitable FTSE250 entry

Apple announcement’s in the week beginning 7th September of a refresh in the I-Touch and I-pod Nano range’s and a possibility of an I-Pad announcement as well (like others I feel the I-pad will come in early 2010 rather than this year but let’s hope we are surprised) I am now convinced that the I-touch and MORE importantly the next gen I-Pod Nano WILL be SGX’d - producing a massive boost for royalty volumes in the all important Xmas quarter , the worst that can happen is that the I-pod Nano is STILL MBX’d J - with a camera and video and Apple’s intent to crush Zune and all other competition I have no doubt they will order the best at very little if any extra cost from Samsung.

In conclusion

A great day with a great company that lifted my sprit’s , a re-union with good friends and old acquaintances .

IMG embrace the zeitgeist and I am so glad that I am heavily invested in this wonderful company

Regards and best wishes to ALL Imagineer’s and if you have managed to get to this point of the post - go and buy yourself a drink - you deserve it !


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