Bloomberg News

MIPS Is Said to Have Hired Goldman Sachs to Help Find a B

April 13, 2012

MIPS Technologies Inc. (MIPS:US), the struggling designer of processors for communications systems and consumer electronics, is looking for a buyer, according to people with knowledge of the decision.

The Sunnyvale, California-based company hired Goldman Sachs Group Inc. (GS:US) to identify and negotiate with possible acquirers, said the people, who declined to be identified because the plan hasn’t been made public. The shares jumped 26 percent to $6.58 at yesterday’s close in New York.

MIPS designs processors and related technology and then licenses them to chipmakers. The company, whose sales peaked during the dot-com boom more than a decade ago, has been trying to capitalize on surging demand for smartphones and tablets. It has made scant headway in mobile devices and is losing ground in other electronics, such as televisions, to ARM Holdings Plc (ARM), said Suji De Silva, an analyst at ThinkEquity LLC.

“Anybody who buys MIPS is going to be zigging while everyone else is zagging,” said De Silva, who is based in San Francisco and has a hold rating on MIPS. Still, given its expertise in processor design, “it has some scarcity value,” he said.

MIPS stock (MIPS:US) has gained 48 percent this year, giving it a market value of $349.4 million.

Potential Bidders

The search for a buyer has been under way for several weeks, the people said. ARM, based in Cambridge, England, is unlikely to make a bid, two of the people said.

ThinkEquity’s De Silva said that Broadcom Corp., MIPS’s biggest customer, and Qualcomm Inc. may consider purchasing the company to acquire the ability to make more powerful processors.

Jen Bernier, a spokeswoman for MIPS, declined to comment, as did Andy Phillips at ARM. Representatives from Goldman Sachs, Broadcom and Qualcomm also declined to comment.

MIPS lists (MIPS:US) Cisco Systems Inc., Broadcom, Sony Corp. and Texas Instruments Inc. among its licensees. The manufacturers have used its technology in chips for televisions, digital set- top boxes and home-networking devices. MIPS technology also goes into phone networks.

While it seeks faster-growing markets and attempts to squeeze more money from its intellectual property, MIPS has posted three quarters of declining sales and earnings. The company forecast a loss of 2 cents to 6 cents a share for the most recent quarter, excluding some items. MIPS is slated to report the results on April 26. The company has cash and short- term investments of $110.7 million as of Jan. 25.

In January, MIPS Chief Executive Officer Sandeep Vij told analysts that the company was pursuing “several paths towards monetization” of its patent portfolio. He declined to give more details. MIPS has 580 patents worldwide, covering areas such as power management and chip security.

To contact the reporters on this story: Matthew Campbell in London at mcampbell39@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net; Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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Companies Mentioned

  • GS
    (Goldman Sachs Group Inc/The)
    • $176.83 USD
    • -3.35
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