13-Bagger Imagination Technologies 'Ahead Of Target'

Published in Company Comment on 12 December 2012

Imagination Technologies (LON: IMG) issues half-year results.

The shares of Imagination Technologies (LSE: IMG) slid 19p, or 4%, to 430p during early London trade this morning even though the embedded processor designer claimed its customers had performed 'ahead of target'.

The FTSE 250 midcap said its partners had 'shipped' 237 million chips based on the company's own designs during the six months to October. The performance was 90% up on last year and prompted Imagination to advance its full-year projection to 500 million chips.

Imagination also described its long-stated goal of its partners using a billion of its chips annually by 2016 as "a realistic objective".

Imagination's customers include Apple, Motorola and Samsung and its processor designs are used in a wide variety of mobile phones, tablets, games consoles, televisions and set-top boxes.

The chip shipment details were announced alongside Imagination's half-year results, which showed turnover climbing 27% to £71m and adjusted profits gaining 10% to £17m. Royalty revenues jumped 66% to £39m, while net cash stood at £55m.

Hossein Yassaie, Imagination's chief executive, said:

"Our 'smart' technologies continue to be adopted across new and existing partners, creating a solid base for continued momentum in future volume growth…We remain confident of our continued good progress given the growing demand across our IP families, the growth in design wins across a widening range of end user markets and the momentum in our partners' chip volume."

Prior to today, City experts that study Imagination reckoned current-year earnings were on their way to improving 13% to 12.4p per share. Such projections value the company at a racy 37 times potential profits.

Forecasts for 2014 suggest earnings of 17p per share.

Of course, whether today's shipment news and half-year results can justify the current valuation -- and signal Imagination as a 'buy' -- remains your decision.

Still, only four years ago, these shares traded at just 32p. Smart investors who spotted Imagination's growth potential back then have since earned a 13-fold gain -- equivalent to an astonishing 91% annual compound average return.

If you are keen to earn such handsome profits from shares, requesting this free Motley Fool report could help you on your way.

The report explains how tracking down small, dynamic but overlooked companies -- such as Imagination in 2008 -- is a vital step on the path to becoming rich from shares. You never know, the next Imagination Technologies could be out there right now ready to transform your wealth.

> Maynard does not own any share mentioned in this article. The Motley Fool owns shares in Imagination Technologies.

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