Board members have moved to prop up the battered share price of microprocessors designer Imagination Technologies (IMG) yet this looks like a futile, short-term gesture. Non-executive chairman Bert Nordberg and non-executive director Andrew Heath invested a combined £82,621 of their own money into shares in the company just days before Christmas, taking their respective stakes in the Hertfordshire-based company to 60,000 and 58,387.

Those purchases came just a few days after long-term chief executive officer Sir Hossein Yassaie also added to his own stake, buying 20,000 shares at 121.75p. Yassaie now owns 838,543, or approximately 0.31% of the company.

We believe this will do little to support the stock price given the savage decline in its core PC and smartphone markets. PC numbers have been in decline for several years while smartphones unit sales are anticipated to have fallen for the first time during 2015, according to market researchers. This is not new news to investors but of more concern is management’s refusal to call time on its long-run loss-making PURE digital radio business. In the half year to 30 September 2015, PURE ran up a £2.75 million operating loss on £8.7 million revenues, and this year will be the unit’s eighth-straight of losing money.

This is upping the ante for both management and investors alike with calls to shut down the PURE business coming from seemingly every direction barring the CEO’s own office. Yassaie simply refuses to do so, seeing it as fundamental to Imagination’s wider research and development (R&D) efforts. Analysts counter that closing PURE would free the company from an unsustainable R&D burden, and would be ‘very earnings enhancing,’ according to Investec’s Roger Phillips and Julian Yates.

The fact that iPhone sales are under pressure is another huge threat since Imagination earns an estimated 30% of its revenue in this area. Imagination is Apple’s (AAPL:NDQ) key supplier of graphics chips, or GPUs (graphics processing units).

Imagination increasingly looks like a takeover candidate, but we could see the shares going lower before any deal is tabled.

THE TRADE

Buyer: Bert Nordberg, chairman & Andrew Heath, non-executive director

Consideration: £32,995 & £49,626

No. of shares bought: 25,000 & 37,710

Subsequent holding: 60,000 (0.022%) & 58,387 (0.021%)