UPDATE 2-Imagination Tech buys 3D graphics firm for $27 mln

* To buy Caustic Graphics

* Will bring 3D graphics technology to mobile

* H1 adjusted pretax profit up 131 percent

* Remains confident on full year

* Shares up 4.8 pct

(Adds CEO comments, analyst reaction, shares)

By Paul Sandle

LONDON, Dec 14 (BestGrowthStock) – Imagination Technologies Group
Plc (IMG.L: ), the British designer of video chips used in Apple
Inc’s (AAPL.O: ) iPhone, is to pay $27 million for Caustic
Graphics to help bring cinema-quality 3D graphics to mobile
phones.

Imagination also posted a 131 percent rise in adjusted
pretax profit to 10.1 million pounds ($16 million), on revenue
up 16 percent to 44 million in the six months through October
after its partners shipped 107 million of its chips.

The company, which also makes Pure-branded digital radios,
said on Tuesday it remained confident of continued good progress
and was on track to exceed its target of shipping 200 million
chips in the year to end-April 2011.

Chief Executive Hossein Yassaie said the group had signed
new and extended licensees with chipmakers ranging from Apple
and Intel (INTC.O: ), both shareholders in the business, to
Samsung (005930.KS: ) and Fujitsu (6719.T: ), keeping it ahead of
competition from the likes of ARM Holdings Plc (ARM.L: ).

“We are doing repeat business with a lot of our customers,
we are securing new customers,” he said in an interview. “If you
look at volume and actual devices shipped, we are talking about
100 million units, and some of our competitors have nothing to
show.”

Shares in Imagination, which have risen 62 percent in the
last 12 months, were up 4.8 percent at 376.7 pence by 1012 GMT.

Analysts at JP Morgan said it was a strong set of results
for the semiconductor side of the business and investors would
discount a weak performance, as flagged by management, in Pure
radios.

Yassaie said Pure had experienced tough times but had seen
improvements since October and initial numbers for Christmas in
the UK were looking encouraging.

On the Caustic deal, he said Imagination would incorporate
the latter’s techniques for rendering three-dimensional graphics
into its graphics processors, initially for TVs and games
consoles and later for mobile phones.

“We would not have acquired this technology if we did not
believe we could get it into handsets,” he said.

Last month, Imagination agreed to buy HelloSoft for up to
$47 million to boost its capabilities in Wi-Fi, and raised $60
million from shareholders for the deal and further buys.
[ID:nLDE6AG0AT]
(Editing by Dan Lalor and David Holmes)
($1 = 0.6301 pound)

UPDATE 2-Imagination Tech buys 3D graphics firm for $27 mln