LONDON (Reuters) - Imagination Technologies, the British company that supplies graphics processing to Apple Inc, said it expected an improved second half as costly investments which weighed on the first months of the year begin to pay off.
The cost of developing its MIPS processing platforms -- a computer processing architecture first developed in the 1980s -- and multimedia contributed to a 75 percent drop in adjusted profit in the first half, the company said.
"We are migrating from a heavy investment to exploitation," said Chief Executive Hossein Yassaie.
"We should see significant and steady improvement in financial performance."
The group has been investing in the MIPS processing platform after it bought the owner of the pioneering 32-bit and 64-bit technology two years ago.
Shares in the group jumped 12 percent in early deals on Tuesday as analysts said the results were not as bad as expected, with revenue, down 3 percent to 82.2 million pounds ($129.1 million), just ahead of consensus.
They were trading at 212.8 pence at 1012 GMT.
Jefferies analyst Lee Simpson, who rates Imagination a "buy", said the results were better than expected on both the top and bottom lines.
"Royalties growth in the first half is better than hoped, with (volumes of MIPS shipped) stabilizing sooner than expected," he said.
Imagination reported adjusted profit of 3.3 million pounds for the six months to end-October, down from 13.2 million pounds a year earlier.
($1 = 0.6367 pounds)
Editing by Kate Holton and Clara Ferreira Marques