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MIPS Technologies, Inc. F4Q10 (Qtr End 06/30/10) Earnings Call Transcript

MIPS Technologies, Inc. F4Q10 (Qtr End 06/30/10) Earnings Call Transcript

MIPS Technologies, Inc. (MIPS)

F4Q10 (Qtr End 06/30/10) Earnings Call

August 04, 2010 4:45 p.m. ET

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Executives

Jen Bernier - Public Relations Manager

Sandeep Vij - President & CEO

Maury Austin - CFO

Analysts

Gary Mobley - The Benchmark Company

Suji De Silva - Kaufman Brothers

Jeff Schreiner - Capstone Investments

Amy Norflus - Barclays Capital

Chris Sadalla

Paul McWilliams

Dean Fox

Presentation

Operator

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Good afternoon and welcome to the MIPS Technologies Fourth Quarter and Fiscal 2010 Financial Results Call. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I'll now turn the call over to Jen Bernier, MIPS' Public Relations Manager. Ma'am, you may begin.

Jen Bernier

Thank you, and welcome to the MIPS Technologies' fourth quarter and fiscal 2010 earnings conference call. I'm Jen Bernier, MIPS' Public Relations Manager.

Leading the call today are Sandeep Vij, Chief Executive Officer and Maury Austin, Chief Financial Officer. After they discuss the business highlights and detailed financial results, we'll open the call for Q&A. If you do not have a copy of the earnings release, it is available on our website at www.mips.com.

Before we begin, I would like to remind you that this conference call may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including projections of certain operating results for the first quarter of fiscal 2011.

Listeners are cautioned not to place undue reliance on this forward-looking information. Many important factors could cause the results to differ materially from those contained in such projections or forward-looking statements. We refer you to the risk factors section of the documents that we file from time-to-time with the Securities and Exchange Commission for factors that would cause the results to differ materially from our forward-looking statements.

In our financial discussions today, we will be referring to the fourth quarter and fiscal 2010 GAAP and non-GAAP results. MIPS' management believes that non-GAAP information is useful, because it can enhance the understanding of the company's ongoing economic performance. MIPS Technologies uses non-GAAP measures in evaluating its financial results, as well as for internal planning and budgeting purposes.

The non-GAAP discussed results include today FAS 123R stock option expense, certain costs and expenses related to acquisitions, divestitures, impairments and restructuring costs incurred during the period. Please refer to the earnings press release or to the Investor Relations page of our website for a reconciliation of GAAP to non-GAAP.

As a reminder, the playback number for this conference call is 203-369-0063, and the access code is MIPS. The recorded call will be available for 30 days after the call. An audio replay will also be posted on the Investor Relations page of our website at www.mips.com.

With that said, I will now turn the call over to Sandeep Vij.

Sandeep Vij

Thanks for joining us today. This marks the end of my second quarter with MIPS and we have made great stride in number of areas. Sales momentum is increasing, our pipeline continues to grow and our solution offering has significantly strengthened. All of these has resulted in record results, strong cash flow and a 37% operating margin, demonstrating the strength of our business model.

Examples of our strong positive momentum include Q4 revenue, which was up 33% over the prior quarter and licensing revenue which was up 100% over the prior quarter. This represents one of the best licensing quarters ever in the history of MIPS and underscores the traction how our solutions are having in the marketplace.

In Q4, MIPS experienced our highest quarter of royalty unit shipments ever. This is our fourth consecutive quarter of increasing royalty units with the last three quarters each being new records. For the year, we are over half a billion units shift, another all time record. Net income was up 87% over the prior quarter resulting in cash flow from operations of almost $9 million. Needless to say I'm pleased with these results, MIPS is showing strong momentum and increasing customer attraction across our key markets in the digital home, networking and mobile handsets.

Well we have new licenses in each of these areas this quarter including another win in mobile handsets. Amongst this quarters wins were 19 licenses for our multi-threaded processor cores showing the customer see the value of multi-threading and multi processing with MIPS. Customers can actually fit three of our multi-threaded, multi-core 10O4K in approximately the same die area as two single threaded cores from our nearest competitor, resulting in higher system performance and low power. MIPS multi-threaded cores helped our licensing Mobileye and achieve a 600% performance improvement over its previous ARM-based solution.

MIPS technical leadership in multi-threading, multi-core and 64-bit processor solution provides unique benefits for our licensees across a broad range of markets and application. MIPS business is divided into three main areas, the first of these is the digital home, this is a fast growing market with processing needs increasing rapidly driven by internet, connectivity and other emerging technologies.

MIPS holds the number one position in the digital home with the largest market share in digital television, set top boxes, and Blu-Ray players to name a few. Our royalty units were up by 39% quarter-over-quarter and 156% year-over-year in digital television, an example of the strength of MIPS in this market.

Networking including, wired and wireless networking is our second key market. Both areas are growing rapidly with increased shipments of cable modems and high end wireless LAN equipment that is addressed the increase in demand for internet connectivity and broad band access.

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