The Investment column: VideoLogic

The Investment Column

A MAIDEN pounds 1.8M profit yesterday from VideoLogic, the multimedia firm, could be just the beginning. The Hertfordshire-based group, floated in 1994, appears to have transformed itself from from a low-margin components maker to a high-margin intellectual property rights player.

Japan offers a glimpse of VideoLogic's potential. There Sega sold one million of its new Dreamcast video games consoles, incorporating a VideoLogic- designed graphics chip, in the last five months. Royalties from the chip were largely responsible for pushing sales up 50 per cent in areas outside Europe and the US. Dreamcast is to launch in those regions in September and analysts are pencilling in a twofold or more increase in this year's pre-tax profits to pounds 4m.

VideoLogic has other products in development, including a chip for digital TV set-top boxes. Given its pounds 7.2m cash balance and strong allies, VideoLogic shares seem well worth a punt.