MIPS Technologies Reports First Quarter Fiscal 2009 Financial Results (Revenue up 18%)

MOUNTAIN VIEW, Calif., Oct. 29 /PRNewswire-FirstCall/ -- MIPS Technologies, Inc. (NASDAQ: MIPS), a leading provider of industry-standard architectures, processors and analog IP for digital consumer, home networking, wireless, communications and business applications, today reported consolidated financial results for its first quarter fiscal 2009 ended September 30, 2008. All financial results are reported in U.S. GAAP unless otherwise noted.


Revenue for the first quarter was $26.2 million, a decrease of 9 percent over the prior quarter revenue of $28.9 million but an increase of 18 percent from the $22.2 million reported in the first fiscal quarter a year ago. The Q1 sequential revenue decrease was driven primarily by lower contract and license revenues partially offset by increased revenues from royalties.

Contract and license revenue was $14.4 million, a decrease of 20 percent from the $18.1 million reported in the prior quarter but an increase of 24 percent from the $11.6 million reported in the first quarter a year ago. This first quarter sequential contract and license revenue decrease was due to lower Analog Business Group license results. The year to year contract and license revenue increase was due to the impact of having a full quarters' Analog Business revenue in the Q1'09 results compared with only 5 weeks in Q1'08. Revenue from royalties was $11.8 million, an increase of $1.0 million or 10 percent from the prior quarter and $1.3 million or 12 percent from the $10.5 million reported in the first quarter a year ago. The sequential increase in royalty revenue was driven by higher licensee unit volumes compared with the prior quarter. End user licensee units grew 14% to 112 million units.

The Company's fiscal Q1 2009 GAAP net loss was $7.0 million or $0.16 per share on a basic and diluted basis. This compares with a net loss of $108.5 million or $2.45 per basic and diluted share in the prior quarter and a net loss of $7.0 million or $0.16 per share in the first quarter a year ago.

Non-GAAP net income in the first quarter of fiscal 2009, which excludes the effect of equity based compensation expense, restructuring costs, and certain costs related to the acquisition of Chipidea, was $1.5 million or $0.03 per diluted share, compared with a non-GAAP net income of $1.3 million or $0.03 per diluted share in the prior quarter and $3.9 million or $0.08 per diluted share in the first quarter a year ago. The tables below provide a reconciliation of non-GAAP measures used in this release to the corresponding GAAP results.

The Company's Q1'09 ending cash balance was $16.2 million, up $2.2 million from the previous quarter including approximately a $1.3 million outflow related to the restructuring.

"We had a solid quarter in both processor royalty and licensing activity, reflecting continued momentum for that side of the business," said John Bourgoin, president and CEO. "Our mixed first quarter results reflect challenges we are facing with a softening market and difficulties in reaching our revenue objectives in our Analog business. But our cost reduction efforts, which we began during the quarter and continue today, are having an important positive impact on our costs, and in the uncertain economy, these actions provide us with added financial safety margin," added Bourgoin.

MIPS Technologies invites you to listen in a live conference call to management's discussion of Q1 fiscal 2009 results, as well as guidance for Q2 fiscal 2009. The conference call number is 210-839-8502 and the replay number is 203-369-1154. The password for both calls is MIPS. The replay will be available for 30 days shortly following the end of the conference call. An audio replay of the conference call will also be posted on the company's website at: http://www.mips.com/company/investor-relations/.

About MIPS Technologies, Inc.

MIPS Technologies, Inc. (NasdaqGS: MIPS) is the world's second largest semiconductor design IP company and the number one analog IP company worldwide. With more than 250 customers around the globe, MIPS Technologies is the only company that provides a combined portfolio of processors, analog IP and software tools for the embedded market. The company powers some of the world's most popular products for the digital entertainment, home networking, wireless, and portable media markets-including broadband devices from Linksys, DTVs and digital consumer devices from Sony, DVD recordable devices from Pioneer, digital set-top boxes from Motorola, network routers from Cisco, 32-bit microcontrollers from Microchip Technology and laser printers from Hewlett-Packard. Founded in 1998, MIPS Technologies is headquartered in Mountain View, California, with offices worldwide. For more information, contact (650) 567-5000 or visit http://www.mips.com.

Forward Looking Statements

This press release contains forward-looking statements; such statements are indicated by forward-looking language such as "plans", "anticipates", "expects", "will", and other words or phrases contemplating future activities including statements regarding MIPS Technologies' expectations regarding customers' use of MIPS' products. These forward-looking statements include MIPS' expectation regarding improvements in financial results. Actual events or results may differ materially from those anticipated in these forward-looking statements as a result of a number of different risks and uncertainties, including but not limited to: the fact that there can be no assurance that our products will achieve market acceptance, difficulties that may be encountered in the integration of the Chipidea business, changes in our research and development expenses, the anticipated benefits of our partnering relationships may be more difficult to achieve than expected, the timing of or delays in customer orders, delays in the design process, the length of MIPS Technologies' sales cycle, MIPS Technologies' ability to develop, introduce and market new products and product enhancements, and the level of demand for semiconductors and end-user products that incorporate semiconductors. For a further discussion of risk factors affecting our business, we refer you to the risk factors section in the documents we file from time to time with the Securities and Exchange Commission.


                           MIPS TECHNOLOGIES, INC.
                                (In thousands)

                                                 September 30,     June 30,
                                                     2008            2008


    Current assets:
      Cash and cash equivalents                      $16,174        $13,938
      Accounts receivable, net                        13,951         14,462
      Prepaid expenses and other current assets       22,122         24,803
        Total current assets                          52,247         53,203

    Equipment, furniture and property, net            14,339         16,307
    Goodwill                                                                      31,311                  40,624
        Other  assets                                                                            31,150                  42,610
                                                                                                          129,047              $152,744

                          Liabilities  and  Stockholders'  Equity
        Current  liabilities:
            Accounts  payable                                                                $3,529                  $3,441
            Accrued  liabilities                                                          45,883                  51,963
            Debt  -  short  term                                                                7,377                  18,641
            Deferred  revenue                                                                  5,079                    4,283
                Total  current  liabilities                                          61,868                  78,328

        Long-term  liabilities:
            Debt  -  long  term                                                                10,695                            -
            Other  long  term  liabilities                                          20,465                  29,496
                Total  long  term  liabilities                                      31,160                  29,496

        Stockholders'  equity                                                            36,019                  44,920
                                                                                                        $129,047              $152,744

                                                      MIPS  TECHNOLOGIES,  INC.
                                        (In  thousands,  except  per  share  data)

                                                                                                            Three  Months  Ended
                                                                                                                    September  30,
                                                                                                            2008                          2007
            Royalties                                                                            $11,832                $10,519
            Contract  Revenue                                                                14,385                  11,633
                Total  revenue                                                                  26,217                  22,152

        Cost  of  Sales                                                                            7,644                    3,324

        Gross  Margin                                                                            18,573                  18,828

        Operating  expenses:
            Research  and  development                                                  7,347                    9,013
            Sales  and  marketing                                                            5,045                    5,586
            General  and  administrative                                              6,957                    7,009
            Acquired  in-process  research  and  development                  -                    5,440
            Restructuring                                                                        4,931                            -
                Total  operating  expenses                                            24,280                  27,048

        Operating  loss                                                                        (5,707)                (8,220)
        Other  income,  net                                                                  (1,438)                      495
        Loss  before  income  taxes                                                    (7,145)                (7,725)
        Benefit  from  income  taxes                                                      (178)                    (694)
        Net  loss                                                                                  $(6,967)              $(7,031)
        Net  loss  per  share,  basic  and  diluted                          $(0.16)                $(0.16)
        Common  shares  outstanding,  basic  and  diluted            44,334                  43,766

                                                      MIPS  TECHNOLOGIES,  INC.
                                        (In  thousands,  except  per  share  data)

                                                                Three  Months      Three  Months      Three  Months
                                                                      Ended                      Ended                    Ended
                                                                September  30,        June  30,        September  30,
                                                                      2008                          2008                    2007

                  GAAP  net  loss                            $(6,967)            $(108,462)            $(7,031)
                  Net  loss  per  basic  share        $(0.16)                  $(2.45)              $(0.16)
                  Net  loss  per  diluted  share    $(0.16)                  $(2.45)              $(0.16)
        (a)    Equity-based  compensation
                    expense  under  SFAS  123R        $1,161                    $1,617                $2,391
        (b)    Amortization  of  intangibles    1,515                      2,541                      970
        (c)    Acquisition  related  cost          1,545                      2,052                  1,313
        (d)    Integration  cost                                  -                              -                      839
        (e)    Acquired  in-process
                    research  and  development                -                              -                  5,440
        (f)    Impairment  of  goodwill
                    and  acquired
                    intangible  assets                              -                  103,107                          -
        (g)    Restructuring                                4,931                          281                          -
        (h)    Equity  Write-Down                        2,276                              -
        (i)    Tax  adjustment                                (662)                  (2,092)                        -
                  Non-GAAP  net  income                  $1,523                    $1,320                $3,922
                  Non-GAAP  net  income
                    per  basic  share                          $0.03                      $0.03                  $0.09
                  Non-GAAP  net
                    income  per  diluted  share        $0.03                      $0.03                  $0.08
                  Common  shares
                    outstanding  -  basic                44,334                    44,193                43,766
                  Common  shares
                    outstanding  -  diluted            44,952                    44,869                46,723


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