When you're in with Apple, the future can look very rosy.
Having a connection with Apple (NASDAQ: AAPL.US) seems to give a company the golden touch these days -- if you can get your products or designs into iPhones or iPads or any other of those must-have gizmos and gadgets, as ARM (LSE: ARM) has done, you're pretty much made.
If Apple itself takes a stake, then there must be a chance for a full takeover too, which could well come at a very nice price -- especially if someone like Intel (NASDAQ: INTC.US) also owns some, and there could be a potential bidding war.
That pretty much sums up Imagination Technologies (LSE: IMG), which reported interim results this week. Imagination holds intellectual property rights to some pretty nifty communications and multimedia semiconductor technology, and also partners with such giants as Sony, Google (NASDAQ: GOOG.US), ARM and a good few others.
Steadily rising revenues
Revenues have been growing steadily since Imagination turned over £48m back in 2007, with this year's first half alone bringing in £56m, which is well up on the £44m interim figure from a year ago.
That translated into adjusted pre-tax profit of £15.3m, which is 50% up on the same stage last year, with adjusted earnings per share coming in at 4.9p, up 48%. But there is no dividend yet, so it's not one for income seekers at this stage in its life.
Those figures look good, but the current price of 482p per share suggests a P/E of 49 if the first-half results are simply repeated in the remaining six months of the year, and it's only a slightly lower 47 using current end-of-year forecasts. But it would drop to around 33 if the City's expectations of near 50% earnings growth for 2013 should come good.
With the share price having risen from a low point of just 32p in 2008 to the 480p mark today, many will see them as overpriced. But is there more to come?
Well, the bandwidth boom that is coming from the next generation of fibre-based connections should bring the cost of those gigabytes down and boost the use of mobile computing technology -- even I, with my £4.95 Nokia phone and general dislike of the things, was reflecting on the benefits while trying to find my way round Manchester on Saturday, having forgotten my printed Google maps and train timetable.
£100m in revenues expected this year? ARM is on for five times that, such is the way this business is going.
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The Motley Fool owns shares in Imagination Technologies.