MIPS Technologies Reports Second Quarter Fiscal 2006 Financial Results

Sequential Revenue Growth of 37%

MOUNTAIN VIEW, Calif., Jan. 19 /PRNewswire-FirstCall/ -- MIPS Technologies, Inc. (NASDAQ: MIPS), today reported financial results for its second fiscal quarter ended December 31, 2005. Revenue for the second quarter of fiscal 2006 increased by $4.4 million compared to the prior quarter ending September 30, 2005, the result of solid licensing activity and increases in royalties.

Total revenue for the second quarter of fiscal 2006 was $16.4 million, an increase of 5 percent compared to $15.5 million for the same quarter a year ago. Royalties were $8.9 million, an increase of 18 percent compared to $7.6 million in the same quarter a year ago. Contract revenue was $7.4 million, a decrease of 6 percent compared to $7.9 million in the comparable period in fiscal 2005. Net income for the second quarter of fiscal 2006 on a generally accepted accounting principles ("GAAP") basis was $2.4 million compared to a net income of $3.5 million for the same quarter a year ago. GAAP net income per share on a diluted basis for the second quarter of fiscal 2006 was $0.05 compared to a net income per share of $0.08 for the same quarter a year ago.

Beginning in the September 2005 quarter, the Company recognized equity- based compensation expense pursuant to the fair value method under SFAS 123R. This expense for the second quarter ending December 31, 2005 was $2.1 million. Non-GAAP net income for the second quarter of fiscal 2006, which excludes the effect of the stock option expense was $4.3 million or $0.10 per diluted share compared to net income of $3.5 million or $0.08 per share for the same quarter a year ago. A reconciliation of non-GAAP adjustments is summarized in the tables below.

"We are pleased with our second quarter results and the return to more normal levels of licensing activity," said Merv Kato, chief financial officer of MIPS Technologies. "Agreements signed this quarter indicate that our solutions are compelling for a wide range of applications the world over. This same growth trend was exhibited in our royalty stream as licensees continue to deliver numerous MIPS-based products to the consumer and networking markets."

"This quarter's solid growth in both licensing activities and royalty revenue reflect both the compelling nature of our product line, as well as the robust design activity of our licensees," said John Bourgoin, president and CEO of MIPS Technologies. "We are particularly pleased that a significant portion of our license revenue came from new technology products, indicating that our superior value proposition is well-recognized. Our royalties in the markets other than video games reached record levels, indicating ongoing and broad based growth in the production of MIPS-based products worldwide."

MIPS Technologies invites you to listen to management's discussion of Q2 fiscal 2006 results and guidance for Q3 fiscal 2006 in a live conference call today beginning at 1:45 p.m. Pacific. Conference call number is 1-719-457-2618. Replay number is 1-719-457-0820 and will be available for 5 days, beginning shortly after the end of the conference call. The access code is 4322514. An audio replay of the conference call will be posted on the Company's website ( www.mips.com/content/Corporate/InvestorRelations/ir) soon thereafter.

Q2 FY2006 Highlights:

From its inception over 20 years ago, the MIPS(R) architecture has represented innovation and performance. Today, MIPS Technologies and its licensees continue to lead in system-performance and innovative solutions for established and emerging markets. With multiple design teams actively developing the architecture, hundreds of successful implementations throughout the world, and a vibrant ecosystem of third-party tools and software-MIPS continues to be at the core of the user experience.

Following are selected press release headlines from MIPS Technologies, and the company's licensees, systems vendors and third party providers.

    HDTV & DTV News

    -- Planetweb(R) to Bring SpectraWorks(TM) for Digital TV Applications to
       MIPS-Based(TM) TAEC TX49 RISC CPU Core Based ASSPs
    -- Zoran and Xoceco Establish Joint Technology Laboratory In China;
       Zoran's MIPS-Based(TM) SupraHD TV Controller Key Component in Xoceco's
       New Products to be Launched at CES 2006
    -- Zoran and Thomson Announce Low Cost Digital-to-Analog Solution To
       Support the Transition To Digital Broadcast; Design Utilizes Zoran's
       MIPS-Based(TM) SupraHD 640 digital television processor

    Media Server and Gateway News

    -- Actiontec's New Broadband Home Router Integrates Entropic's
       MIPS-Based(TM) c.LINK(TM) Chipset
    -- Entropic Communications and Westell Technologies Partner on Broadband
       Gateway for Networking of Digital Entertainment in the Home; Westell
       Utilizing MIPS-Based(TM) c.LINK 270 Chipset
    -- Entropic Communications' Ecosystem Helps OEMs Design for Home
       Networking of Digital Entertainment; Employs MIPS-Based(TM) c.LINK
    -- Texas Instruments and Ashley Laurent Team to Provide Enhanced DSL RG
       Software Options; Software Solution Ported to MIPS-Based(TM) AR7 CPU

    Advanced DVD Player & Recorder News

    -- Sigma Designs to Work on Full-Featured Blu-ray Player with Pioneer; New
       Player Utilizes Sigma's Industry-Leading MIPS-Based(TM) SMP8630 Family
       of Media Processors
    -- Zoran Driving Convergence in the Home; DVDR+ATSC Reference Design
       Utilizes MIPS-Based(TM) SupraHD 640 CPU; DVB Reference Design Includes
       MIPS-Based(TM) SupraTV 150 CPU
    -- Zoran Technology Breakthrough Delivers Entire DVD Recorder Capability
       on A Single System-On-A-Chip; MIPS-Based(TM) Activa 200 Now Sampling

    Broadband News

    -- Second Generation Integrated Software and Silicon Solution Extends
       Wintegra Leadership in Access Processing; MIPS-Based(TM) WinPath2 More
       than Doubles Family Performance
    -- Wintegra and Ikanos Offer MIPS-Based(TM) Joint Reference Platform for
       VDSL2 Line Card Designs
    -- Wintegra Advances its Leadership in DSL Aggregation with a New, Fully
       Integrated and Production Ready MIPS-Based(TM) Silicon & Software

    Data Communications and Networking News

    -- Entropic Communications Ships 100,000th MIPS-Based(TM) c.LINK Chipset
    -- Ample Communications and Cavium Offer Interoperable Hardware Platform
       for Developers of Firewalls, VPNs, and Content Switching; Utilizes
       MIPS-Based(TM) OCTEON CPU Family
    -- Prestigious AeA Award Given to Entropic Communications for
       MIPS-Based(TM) c.LINK-270 Chip Set

    Corporate News

    -- MIPS Technologies Announces New Vice President of Worldwide Sales
    -- MIPS Technologies Announces Transition for CFO, Kevin C. Eichler
    -- Avnet ASIC Israel Selected as a MIPS Technologies Approved Design

    Newly Announced Licenses

    -- MIPS Technologies Licenses MIPS32(R) 4KEc(R) Core to Ralink Technology
    -- Cheertek Licenses MIPS32(R) 4KEc(R) Core for Next Generation Set-Top
       Box SoCs

    Ecosystem News

    -- MIPS Technologies Becomes Charter Member of RDL Alliance
    -- Accelerated Technology's Nucleus Products Support the MIPS32(R)
       24KE(TM) Family of Processor Cores
    -- Sarnoff Offers H.264 Video on MIPS(R) Architecture
    -- Tektronix, Altera, and FS2 Collaborate on Real-Time Logic Debug
       Solution for Altera FPGAs
    -- Virage Logic and MIPS Technologies Accelerate Processor Performance
       with Core-Optimized IP Kits

    Video Game and Portable Media Player News

    -- AMD's MIPS-Based Alchemy CPU Powers Digital Cube's Highest Performing
       Personal Media Players-Delivers Productivity, GPS Capabilities and
       Satellite DMB for Mobile Entertainment


    -- Innova Card and Hypercom Team to Develop New Products Integrating the
       MIPS-Based(TM); USIP(R) Professional IC
       --  START  Extends  Its  Payment  Terminal  Range  with  MIPS-Based(TM)  USIP
              Professional  Platform
        --  MIPS-Based(TM)  USIP  Essential  Kit  (UEK),  the  new  versatile  development
              kit  to  design  secure  terminals
        --  Innova  Card  Integrates  Its  MIPS-Based(TM)  USIP  Platform  into  Gemplus
              Healthcare  Readers
        --  GIC  Extends  Its  Payment  Terminal  Range  with  MIPS-Based(TM)  USIP(R)
              Professional  Platform
        --  M.POS  Terminals  Integrates  Innova  Card's  MIPS-Based(TM)  USIP  Platform
              in  the  New  Release  of  Its  Wireless  POS  Terminals
        --  DA  Sistemi  and  Innova  Card  jointly  develop  an  integrated  platform;  will
              Utilize  USIP  Professional  IC
        --  Cavium  Networks  Delivers  Unmatched  Integration  and  Functionality  with
              New  Inline  MIPS-Based(TM)  Security  Processor  Family

        Storage  News

        --  TREK  2000  and  Innova  Card  Partner  to  Enhance  Biometric  USB  Storage
              Devices;  TREK  to  Utilize  MIPS-Based(TM)  USIP(TM)  into  ThumbDrive(R)
        --  Home  Storage  Products  Based  on  Broadcom(TM)  Technology  Rank  #1  and  #2
              in  PC  World  Magazine;  Products  Utilize  MIPS-Based(TM)  BCM4780  CPU

        SOHO  and  Wireless  News

        --  Atheros  Communications  Launches  MIPS-Based(TM)  AR5007AP-G  --  World's
              Most  Integrated  Single-Chip  802.11g  Access  Point  Solution

        MIPS  Technologies,  Inc. 

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