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Yesterday's trading: Apple sinks its teeth into ITG

By Geoff Foster for MailOnline
Updated: 03:42 EDT, 25 June 2009

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It posted a respectable set of annual results. But that isn't what got Imagination Technologies Group going yesterday.

Taking a bite: Apple is building a a stake in ITG.

Rather it was early gossip that Goldman Sachs was bidding 150p in the market for 20m shares on behalf of its client, iPod and iTunes techno giant Apple.

As dealers waited in vain for confirmation, the shares raced away on hefty buying to close 39.2p up at a year's peak of 153¾p. Turnover swelled to 12.4m.

Apple sits on a 3% stake but is desperately keen to increase it in order to rain on rival Intel's parade.

The world's leading chip maker recently lifted its shareholding in ITG to 16%, fuelling speculation that it will not be long before it launches a full-scale offer for the company.

Intel has already licensed several generations of ITG's graphics and video software for deployment in its mobile computing and consumer architecture.

Hossein Yassaie, ITG's chief executive, described Intel's recent decision to raise its stake as simply a 'protective measure' by the chip giant. Really?

ITG reported a 56% hike in annual profits to £5m on revenues 24% ahead at £64.1m. This after research and development expenditure of £31.1m over the 12-month period.

Long-term fan Mike Savage at broker Killik said: 'It's the technologies division that is the driver of profitability and value on the back of the inexorable desire of the global consumer to embrace smart phone technology.

'The fact is that, come 2012, ITG could well be providing 50% of all the graphics chips to players in consumer electronics markets.'

Buyers were back in town for blue chips on both sides of the Pond. Their appetites were whetted by the Organisation for Economic Co-operation and Development's assumption that the economic outlook has improved for the first time in two years.

Meanwhile, US stocks also responded to an unexpected jump in May durable goods orders which showed further signs that the economic slump is easing.

The Footsie closed 49.96 points better at 4279.98, while the FTSE 250 rallied 127.89 points to 7320.85.

Wall Street closed 23.05 points down at 8299.86 after the Federal Reserve, as expected, opted to leave interest rates at historic lows.

Mining stocks led the charge. Anglo American bounced back with a gain of 168p to 1820p on hopes that an agreed £40bn merger with Xstrata, 34.9p up at 674.8p, could yet materialise.

Lonmin, in which Xstrata still holds a 25.9% stake following a failed takeover attempt last year, rose 80p to 1214p. Rio Tinto advanced 112p to 2131p and BHP Billiton 62p to 1395p.

Recently the subject of speculation that it was about to sell its 18% stake in US broker MF Global, Man Group lost 11¾p to 275¼p.

Investors exited on hearing that Morgan Stanley had placed 12m shares in the hedge fund giant at around 270p a share with institutional investors.

Tipped to be a Footsie constituent by the end of the year, Heritage Oil gushed 33½p to 518½p. Premier Oil added 38p at 1097p after announcing upbeat flow test results on the Red Emperor discovery on Block 07/03 offshore Vietnam.

Gulf Keystone Petroleum put on 1½p at 13p following an encouraging update on the Shaikan-1 exploration well in Iraqi Kurdistan. Live oil shows were encountered during drilling.

Rumours of a bid approach at £4 a share lifted Dragon Oil 11p to 370p.

More than 14m Afren changed hands and the close was 4¼p better at 45p. Morgan Stanley upgraded to overweight with a 58% price target. The broker believes the company remains a compelling and unique growth story based around West Africa.

Confirmation of a bid approach helped Sylvania Resources put on 3½p more to 80p. Recent rumours have suggested that privately owned South African chrome miner Samancor is ready to table a cash offer of £1 a share.

Kalahari Minerals soared 18.2p to 132¾p as investors recognised the stock was trading at a hefty discount to uranium explorer, Extract Resources, in which it holds 40%.

An Ambrian recommendation in the wake of the results left Avocet Mining 1p dearer at 81p. The broker says that Avocet now offers a backstop to a falling gold price as it now has a good production grow the profile.

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