MIPS Technologies also announced a broad restructuring of its business to better integrate its Analog Business Group and reduce its overall cost structure to enhance profitability and cash flow. During Fiscal Q1 and Q2 2009, the Company expects to incur a new restructuring charge of approximately $4.0 - $5.5 million. These costs include the effects of reductions in employees and facilities-related costs.
John Bourgoin, MIPS president and CEO, said, “Our fourth quarter results reflect both progress and continuing challenges. We had a good revenue quarter, reaching the upper end of our guidance and recording the highest quarterly revenues in the history of our company. But we believe the market continues to show signs of softness, and so we have taken decisive restructuring actions to resize the company in both of our business groups to enable the sustainable profitability and cash flows that investors expect from our combined IP businesses. These restructuring actions, along with the restructuring of our debt facility accomplished in the fourth quarter, will, when completed, reduce our quarterly spending by approximately $5 million. The write-down reflects current market realities, but our belief in the long term growth and strategic value of the Chipidea analog business remains strong."
Net loss for the quarter was $4.5 million, compared to net losses of $43,000 in the year ago quarter and $4.3 million in the first quarter of the year.
Len Perham, MoSys' President and Chief Executive Officer, stated, “During the second quarter, we recorded sequential growth in both licensing and royalties, which resulted in a sequential increase in total revenue. We secured two additional license agreements with new customers for our DDI technology, which enables mobile handset manufacturers to cost effectively meet the design challenges of today's advanced handsets requiring both high resolution displays and multimedia functionality. Additionally, LG Electronics, a licensee of our DDI technology, began production shipments late in the first quarter."
Royalty revenue was $32 million, accounting for 90% of total revenue. This was down 17.6% year-over-year, and down 2.4% sequentially. Contract revenue was $3.4 million or 10% of total revenue. This was down 59% year-over-year and down 48% sequentially.
Net loss booked for the second quarter was $145 million, compared to net losses of $2.7 million in the year ago quarter and $12.6 million in the previous quarter. Total costs and expenses for the quarter were $52.6 million, which included $9.0 million of stock-based compensation expenses and $2.3 million for the previous stock-based compensation restatement and related legal expenses. This is compared to total costs and expenses of $63.0 million for the first quarter of 2008, which included $10.5 million of stock-based compensation expenses and $0.9 million of restatement and related legal expenses.
General litigation expenses for the second quarter of 2008 were $9.1 million, a decrease of $4.1 million from the first quarter of 2008. As compared to the second quarter of last year, total costs and expenses decreased from $57.7 million, which included $10.3 million of stock-based compensation expenses and $7.5 million of restatement and related legal expenses. General litigation expenses in the second quarter of 2008 increased $2.4 million from the second quarter of 2007.
During the second quarter of 2008, Rambus recorded a valuation allowance of $130.5 million against its net deferred tax assets to fully reserve previously recorded tax benefits generated from its pre-tax losses in the U.S. Pursuant to the Statement of Financial Accounting Standard 109: Accounting for Income Taxes, the Company determined this valuation allowance is required due to significant negative evidence, such as cumulative losses in recent years and projected losses from operations. Projected income from settlements or litigation was not included in the determination for the valuation allowance. The valuation allowance will be maintained until sufficient positive evidence exists to support its reversal.
Harold Hughes, president and chief executive officer at Rambus, said, “Despite the obvious headwinds faced in the quarter, we remain committed to a strategy that focuses on long-term success. We will continue to invest in technology development and fully fund our legal efforts. Nevertheless, we intend to reduce our current cost structure through actions which may include downsizing our workforce in order to maintain the financial strength of the company. In doing so, we will continue to support our customers and ensure we follow through on the commitments made to them."
Subsequently, on August 14, 2008, Rambus did announce a restructuring of the company. As a result of this action, Rambus will reduce its workforce by approximately 90 positions and will take a restructuring charge, on a cash basis, of approximately $4.0 million in the next two quarters, primarily related to severance expenses. With this restructuring and related cost saving measures, Rambus expects cash savings of approximately $17 million annually, principally due to reduced compensation related expenses.
Net loss for the quarter was $1.1 million, compared to a net loss of $1.2 million in the year ago quarter, and compared to a net income of $632,000 in the previous quarter.
Dan McCranie, chairman and CEO for Virage Logic, said, "License revenue increased 50% year-over-year while total revenue, which includes royalties, increased 34% year-over-year. We have been able to deliver four consecutive quarters of non-GAAP profitability and this financial performance underscores the significant progress we have made to date in transforming the company”
Stock Market Prices of the G7 Electronics IP Providers
As shown in Tables 6 and 7 and Figure 3 below, the combined stock prices for the G7 decreased 21% year-over-year in absolute terms and decreased 5.4% sequentially. The average percentage change was down over 27% year-over-year and down 1.7% sequentially. This compares to a drop of 14% in the major stock indexes year-over-year and a drop of 3.4% from the previous quarter.
On a year-over-year basis only Rambus' stock price rose (+6.1%). MIPS, ARM, LogicVision and MoSys had drops of over 40%, with MIPS suffering the largest decline at -57%. Virage Logic and CEVA had modest declines.