Electronics IP Industry – An August 2009 Update


As reported in the May 2009 Electronics IP Industry Commentary, on May 7, 2009 Mentor Graphics and LogicVision, Inc. announced the two companies had signed a definitive merger agreement pursuant to which Mentor Graphics would acquire LogicVision. Under the terms of the agreement, which was approved by the boards of directors of both companies, LogicVision stockholders would receive 0.2006 of a share of Mentor Graphics common stock for each share of LogicVision, for aggregate consideration of approximately $13 million dollars (as of May 7, 2009).

In light of the proposed acquisition of LogicVision by Mentor Graphics, LogicVision did not host an earnings call regarding its second quarter 2009 results, and LogicVision has withdrawn its previous 2009 guidance and will not be providing guidance for the third quarter of 2009.


On August 12, 2009 MIPS Technologies, Inc reported financial results for its fourth fiscal quarter and fiscal year, both ended June 30, 2009. Total revenue for the MIPS fourth fiscal quarter (second calendar quarter) was $12.6 million, an almost 40% drop from the $20.9 million in the same quarter a year ago and a 44% drop from the $22 million in the just prior quarter. Royalty revenue was $7.7 million, accounting for 61% of total revenue. This was a decrease of almost 29% year-over-year and a drop of nearly 30% sequentially. Contract revenue was $4.9 million, or 39% of total. This was a drop of 51% from the prior year and a decrease of 58% from the preceding quarter.

Customers shipped 82 million processors units, down 24% sequentially and down 17% year-over-year.

MIPS’ net loss for the fourth fiscal quarter of 2009 was $6.7 million, a considerable improvement from the loss of $108 million a year earlier, while slightly worse than the net loss of $5.9 million in the just previous quarter.

MIPS sold its Analog Business Group on May 7, 2009. In connection with this divestiture, a gain on the disposition of $1.7 million was recorded along with a loss from operations of discontinued operations of $11.0 million. During the quarter, a charge of $1.7 million associated with the reduction in value of an investment in a private technology company was recorded in Other Income and Expenses. Additionally, the Company recorded a tax benefit of $4.3 million in its continuing operations, which was triggered by the sale of its Analog Business Group.

For the full fiscal year, MIPS total revenue was $70.2 million, a decrease of 7.1% from the $75.6 million a year earlier. Royalty revenue was $42.5 million, or 61% of total revenue. This was a drop of 6.7%. Contract revenue was $27.7 million, or 39% of the total. This represented a decline of 7.7%. Net loss for the year was “only” $9.48 million, versus a gar larger net loss of $131.8 million in the prior year. FY'09 operating expense from continuing operations was reduced $22.5 million from fiscal 2008 levels. Customer shipped 427 million processor units, up 4% for the year. Over the last five years, customers have shipped 1.6 billion units for a 25% CAGR.

On July 13, 2009, MIPS had announced that long-time President and CEO John Bourgoin intends to retire at the end of the calendar year. The Company's board of directors planned to begin an immediate search for a successor, which was expected to take three to six months. Bourgoin will remain president and CEO through the end of the calendar year, unless of course his successor is appointed earlier.

Relative to the financial report of August 12, 2009, John Bourgoin, president and CEO, said, "Fiscal 2009 was a challenging year for both MIPS Technologies and for the broad consumer electronics industry. However, MIPS enters fiscal 2010 poised to take advantage of an improving economic outlook, a broad industry-leading suite of products and a very strong financial foundation including over $44 million in cash. We plan to continue to deliver comprehensive solutions that take full advantage of the Android architecture over the coming quarters."


On July 28, 2009 MoSys, Inc reported finanical results for the second quarter ended June 30, 2009. Second quarter results include financials from Prism Circuits, Inc., following the closing of that acquisition on June 5, 2009. Total revenue for the quarter was $1.98 million, a drop of 38% from the $3.2 million in the second quarter of 2008, and a drop of 23% from the $2.6 million in the first quarter of 2009.

License revenue was $306 thousand, or 15% of total revenue. This was a drop of 54% year-over-yea,r and a drop of 42% sequentially. Royalty revenue was $1.7 million, a decline of nearly 34% from the year ago quarter and a decline of 23% from the previous quarter. This includes royalties associated with the Nintendo Wii game console. Royalty revenue decreased from the previous quarter primarily due to lower shipment volumes, as inventory levels were reduced. Additionally, most production by one of MoSys’ major licensees is now subject to a license agreement that provides for royalties to be reported and recognized in the quarter subsequent to shipment of the licensee’s products, instead of the shipment quarter, as was the case under the previous agreement. This change has reduced the comparability of MoSys’ current royalty revenue to its previous quarter’s royalty revenue of $2.0 million and to the royalty revenue of $2.5 million for the second quarter of 2008.

Net loss for Q2 2009 was $5.1 million, a larger loss than the $4.5 million a year earlier and also a larger loss than the $4.1 million in the just preceding quarter.

Commenting on the Company’s second quarter, Len Perham, MoSys’ President and Chief Executive Officer, stated, “While the second quarter was challenging due to continued instability in the macroeconomic environment, we achieved major progress towards positioning MoSys for future growth through our acquisition of Prism Circuits, a leader in high-speed parallel and serial interface IP. The acquisition significantly expands our total addressable market, accelerates our growth opportunities in networking and communications applications and brings us a world class team of experts in high speed SerDes and DDR interface technology. We’ve already made great progress integrating the teams and we recorded our first interface IP revenue during the second quarter and expect this new revenue stream to contribute significantly in the second half of 2009 and beyond. The combination of our proven 1T-SRAM memory with high speed serial I/O IP will enable us to provide a more compelling and comprehensive solution for next generation SoCs and ASICs targeted for the networking and communications markets. We are confident in our forward direction and believe this acquisition will be a catalyst to drive the company towards growth and profitability.”


On July 23, 2009 Rambus Inc reported financial results for the second quarter of 2009 ended June 30, 2009. Revenue for the second quarter of 2009 was $27.0 million, down 1.3% sequentially from the first quarter of 2009 due primarily to lower variable royalty revenue. As compared to the second quarter of 2008, revenue was down 24.4% primarily due to lower royalties resulting from the expiration of the Elpida patent license agreement at the end of the first quarter of 2008 for which revenues were recognized through the second quarter of 2008.

Total costs and expenses for Q2 2009 were $49.3 million, compared to $52.6 million in the year ago quarter and to $43.5 million in the just preceding quarter. General litigation expenses were $15 million in Q2 2009, up nearly $6 million from the same quarter last year.

Net loss for Q2 2009 was $24.0 million, as compared to a net loss of $17.4 million in the first quarter of 2009 and a net loss of $138.3 million (adjusted for adoption of FSP APB 14-1) in the second quarter of 2008.

Harold Hughes, president and chief executive officer at Rambus, said, “In spite of the clearly challenging economic dynamics, we continue to make progress in key legal activities as well as in our breakthrough technology initiatives. During the quarter, we successfully raised capital through a bond to retire maturing debt, fund our continued innovation efforts and pursue strategic acquisitions."

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