SAN JOSE, Calif. MIPS Technologies Inc. announced it will cut 15 percent of its 512 employees following a $103.1 million write off it is taking, mainly against the analog business it recently acquired with Chipidea.
MIPS will integrate its analog and digital businesses more closely following the write off. It expects to spend $4 to $5.5 million in each of its first two fiscal 2009 quarters as part of reductions in staff and facilities as part of that restructuring. The company did not specify where it will make the job cuts.
In an announcement of its latest quarterly financial results, MIPS attributed the write downs to "the softening overall market for intellectual property and delays experienced in realizing expected synergies" with the analog division. The company posted a net loss of $108.5 million--largely as a result of the write downs-- compared with a net loss of $4.3 million in the previous quarter and a net income of $2.3 million in the fourth quarter a year ago.
The Chipidea unit helped MIPS report its highest-ever quarterly revenues and bolstered annual revenues 26 percent to $104.8 million. MIPS remains committed to the analog group, but said the market outlook is weak. Its results suggest the analog business has failed to generate profits so far.
"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 [processor and analog] business groups," said John Bourgoin, chief executive of MIPS in a press statement.
"These restructuring actions will reduce our quarterly spending by approximately $5 million," he added. "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."
Revenue for the fourth quarter was $28.9 million, an increase of six percent over the prior quarter and an increase of 22 percent from the fourth fiscal quarter a year ago. Revenue growth was driven primarily by increased processor license fees, the company said. Contract and license revenue was $18.1 million, an increase of 22 percent from the prior quarter and an increase of 46 percent from the fourth quarter a year ago.
Revenue from royalties was $10.8 million, a decrease of $1.8 million or 14 percent from the prior quarter. The company said it expects royalty growth in the coming year in line with growth in its major markets.
"We're in markets such as digital TV that we expect to grow at a nice rate--around 20 percent a year—generally, even though it was weak this quarter," said Bourgoin in a conference call with analysts.
He estimated MIPS will report revenues of about $28 million in its next quarter. The company expects to see revenues grow 10-20 percent in the coming year.