Last Friday, the stock performance of JAMDAT (NASDAQ:JMDT) looked more like an IPO, not a response to an earnings report. The stock surged roughly 50% to about $26.00.

Investors certainly had reason to be happy. In the first quarter, revenues skyrocketed 115% to $15.1 million compared with the same period last year. The sequential increase was 31%. And this is not growth at the expense of income, since the company posted net income of $2.7 million, which was up from $700,000 in the same period a year ago.

JAMDAT develops games for mobile devices. The company has 110 games, which include such titles as "JAMDAT Bowling," "Tetris," "Lemonade Tycoon," "Downtown Texas Hold 'Em," "The Lord of the Rings," "Tony Hawk's Underground" and "Scrabble."

And JAMDAT is aggressively building its portfolio of games. For example, the company entered a multiyear license agreement with Major League Baseball.

There have also been several key acquisitions. In April, JAMDAT purchased Blue Lava Wireless for $137 million. With the deal, JAMDAT acquires an exclusive 15-year worldwide license for the wireless rights to "Tetris," which is one of the most popular games of all time.

Another important acquisition was for Downtown Wireless. With it, JAMDAT picked up popular gambling titles such as "Downtown Texas Hold 'Em."

JAMDAT also upped its guidance. In the next quarter, the company expects to post $0.12 per share in earnings on sales of $19 million. For the year, the company forecasts earnings of $0.55 cents per share and sales of $80 million.

In rapid fashion, a new industry niche seems to be emerging: mobile entertainment. True, mobile devices have been around for a long time; however, with money flowing into the sector and new multimedia headsets hitting the marketplace, the market seems to have grown legs as of late.

But such growth is inevitably attracting fierce competition. After all, in light of Electronic Arts' (NASDAQ:ERTS) weak quarterly performance, it and other video game giants seeking a ready source of growth may be inclined to push into the mobile market. Or perhaps they'll take a faster approach and buy a company like, well, JAMDAT.

Fool contributor Tom Taulli does not own shares mentioned in this article.