Bluetooth not enough for Parthus
PARTHUS Technologies, the Irish developer of mobile communications technologies, is seen by some as another ARM in the making. As the world's leading designer of chips for devices ranging from mobile phones to automobiles, ARM has seen its shares jump almost 20-fold as investors have bought the potential to be inside every mobile phone sold around the world.
Dublin-based Parthus has a similar business model, licensing the rights to use its chips used in wireless devices like Bluetooth, while avoiding the tricky (and vastly more expensive) manufacturing process. Yesterday, the company said its second quarter losses widened to $5.1m, but added that revenues grew to $7.8m as it boosted the sales of licenses for its technology. Parthus's share rose 7.5p to 224p.
ARM however has largely won the battle to establish its chips as the market standard, helping to explain the 80 times sales at which the shares. Parthus's technologies, however, are not unique, with numerous other designers also building on technologies such as Bluetooth.
Parthus, though, has some formidable backers. Its biggest customer - accounting for 37pc of revenues - is French chip giant ST Microelectronics. Other backers include ARM itself and 3Com, a leading US developer of wireless networking devices. Both have taken small equity stakes in the company, signifying the willingness to jointly develop new technologies.
At present, Parthus is looking to build up market share with cheap licensing deals, worth an average of $600,000 a piece. More encouraging are two multi-million dollar deals the company recently signed.
Davy's, the house broker, predicts annual revenues of $29.2m for this year, a 50pc rise on last year's $19m. But with a market value of about £1 billion the company is trading at 33 times forecast sales with no profits expected soon. Only if you have a huge appetite for risk.
telegraph.co.uk |
