MIPS Technologies, Inc. (
) has reported first-quarter 2013 loss of 4 cents per share,
better than the Zacks Consensus Estimate of 7 cents loss per
share. The adjusted earnings per share exclude one-time items,
but include stock-based compensation expense.
Revenue of $13.9 million was down 63.8% sequentially and 19.2%
year over year. Around 75.1% of first quarter revenue came from
royalties and the remaining 24.9% came from licensing business.
Royalty revenue in the first quarter was $10.5 million versus
$10.6 million in the prior quarter. The royalty per unit was
$0.058 compared to $0.06 in the fourth quarter. The decrease in
royalty per unit was due to decrease in certain customers average
License revenues were $3.4 million in the first quarter compared
to $27.8 million in the fourth quarter.
Management expects increasing unit growth in networking,
especially in wireless LAN which is a major contributor to
royalty unit growth.
Reported gross margin for the quarter was 97.4%, down 110 basis
points (bps) year over year. A favorable mix led to higher gross
margin in the quarter.
Operating expenses of $18.3 million increased 14.4% year over
year. The reported operating margin decreased significantly from
the year-ago quarter. All three, R&D, S&M, and G&A
expenses increased as a percentage of sales from the year-ago
quarter. Moreover, lower gross margins led to the decrease in the
The quarter's GAAP net loss was $4.3 million or loss per share of
8 cents, down from a net income of $0.52 million or 1 cent earned
in the comparable quarter last year. Excluding special items but
including stock-based compensation expense, non-GAAP net loss was
$2.3 million or loss per share of 4 cents compared with net
income of $1.1 million or earnings of 2 cents a share in the
The company has a fairly strong balance sheet, with cash and cash
equivalents, and marketable securities of $130.3 million, up from
$110.8 million in the prior quarter. Trade receivables were $2.6
million, down from $27.0 million in the prior quarter.
Cash flow from operations was $19.6 million versus ($2.6) million
in the year-ago quarter. Capex was $0.6 million versus $0.4
million in the year-ago quarter.
MIPS Technologies, Inc. provides industry-standard processor
architectures and cores for home entertainment, networking,
mobile, and embedded applications. Though the company reported a
disappointing quarter, it surpassed our earnings expectations.
In the quarter, the company performed poorly with both its
royalties and licensing revenue decreasing from the prior
quarter. Though the management remains bullish about its new
products, absence of guidance implies lack of clarity on MIP's
However, we remain optimistic about the company's decision to see
potential strategic alternatives ranging from long-term licensing
of its patent portfolio with key customers, the sale of key
patents, and sale of the entire company.
The company faces stiff competition, particularly from
ARM Holdings plc
), IBM Microelectronics and
Currently, MIPS Technologies has a Zacks #3 Rank, implying a
short-term Hold recommendation.
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MIPS TECH INC (MIPS): Free Stock Analysis
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