What a Great day , once again its 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 benefits of attendance cannot be overemphasized.
This years meeting had a real upbeat feel to it especially after the reversionary/credit crunch feeling to the 2008 AGM , real evidence of IMGs progress was there for all to see and many of the long term questions did not need repeating as answers were already obvious .It was again a delight to meet old friends 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 Directors 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 years 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 others.
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 Directors and staff were equally keen to answer as far as they could investors 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 aims 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 woes - it has to be said that key retailers shot themselves in the foot last Xmas by ultra conservative product orders and this did not help PURE who could have sold many more units if the retailers had been braver. It appears that sales and orders 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 its 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 its future family of products are frankly almost unbelievable - example - the screen could be connected (wirelessly of course) to security cameras 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 kids 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 - its highly secretive stuff - bribes were refused J - its all cloak and dagger stuff and very exciting.
Key retailers have seen the new product range and are very impressed and have been blown-away by Junior !! Interestingly PURE are able to leverage retailers with their new products and this for me is very important- what do I mean by that ?- well retailers want to cut costs and delay payments - 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 - thats pretty effective in sales discussions 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 partners especially those that are also Investors goes from strength to strength , The CEO could not be happier with the relationship which he believes is still in its infancy.
Some key points NOT on the slides
ALL the companys shown are ACTIVE partners - redundant licensees AND SOCs do NOT feature on the stats 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 partners SOCs - 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 players in any of these areas 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- OEMs and Licensees do NOT want to change hardware architecture - its massively expensive to do - hence the key investment once the hardware is decided on is in software and software Engineers - the ratio of engineers Software to Hardware is now approaching 5:1 - what does this mean for IMG ??? - well its GREAT news due to the stickiness of its IP and sheer ability of its low-power Hardware functionality a customer will NOT want to embrace other technology - its 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 folks 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 products 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 patients ( 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 Issues at the forefront of political agendas 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 targets 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 consumers 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 its 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 TVs / computers 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
Iaskd 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 its 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 thats 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
To be seen to be believed -defies description so I wont try! the year on year improvement is astonishing and IMGs 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 CEOs 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 its 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 - its obvious that worldwide many TVs 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 vacancys 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 announcements in the week beginning 7th September of a refresh in the I-Touch and I-pod Nano ranges 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 lets hope we are surprised) I am now convinced that the I-touch and MORE importantly the next gen I-Pod Nano WILL be SGXd - 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 MBXd J - with a camera and video and Apples 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.
A great day with a great company that lifted my sprits , 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 Imagineers 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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