SAN FRANCISCO -- Scrutinizing MIPS Technologies (MIPS) after its shares have fallen from 69 to less than 37 in six weeks is like closing the barn door after the horses have escaped.
Unless, of course, there are more horses (read: bullish investors) kicking around in the barn.
MIPS is the once-independent chip designer purchased in 1992 by
and partially dealt to public investors in a June 1998 initial public offering. The company licenses its technology to chipmakers, including growing relationships with
which pay a royalty for its use.
Currently, however, more than three quarters of MIPS's revenue come from one source,
game players and software cartridges.
announced on Wednesday a surprising choice for the supplier of its next-generation games:
Power PC, the chip that once hoped to take on
microprocessor for personal computers.
Publicly, MIPS never planned to win the new Nintendo business. Echoing similar warnings in past securities filings, the company said in a quarterly report with the
Securities and Exchange Commission
Thursday that "we understand that the next generation Nintendo video-game system will not incorporate any of our technology."
According to Derek Meyer, vice president of sales and marketing for Mountain View, Calif.-based MIPS, the company also wasn't chagrined that
chose technology from a unit of
for its new AOL TV project.
But it's possible investors are a little spooked by the confluence of successes by MIPS competitors. It's even more likely they're looking at the 6 million shares of MIPS that SGI is dumping on the market in a secondary offering. SGI will continue to hold 25.8 million MIPS shares, a 69% stake. And workstation maker SGI plans to unload the entire stake by Sept. 30, 2000, though it has promised to make the process "an orderly multi-step divestiture."
Bottom line: MIPS won't lose all of the Nintendo revenue immediately. Meanwhile, the company has impressive plans to replace the lost revenue with chip licenses from existing customers like Broadcom and TI as well as
. But it faces real competition in the marketplace and a growing supply of its shares in the market.
The shares closed Thursday at 36 5/8, down 5 1/4, or 13%, but the barn door may not be locked shut.
Never Say Never
Chairman and CEO Eric Schmidt took to their keyboards Thursday in defense of their turnaround man. They were aroused by the
item suggesting that Schmidt, the former
chief technology officer, should take the helm of
. Other rumormongers have speculated that Schmidt will be the pick to head
A spokeswoman for the Provo, Utah, maker of networking software, says Schmidt told an audience at a Las Vegas trade show Wednesday that he still has "a lot of projects and much work to do at Novell, and I'm committed to seeing them through." He added: "I'm not done here."
Another thing, adds software analyst Paul J. Dravis of
NationsBanc Montgomery Securities
, who chatted with Schmidt in Vegas: "Eric's a software guy and a product guy, and those companies need hardware guys."
Okay, fine. But what if one of those big companies -- or
, or IBM, a.k.a. "the Internet company" -- acquired Novell for, among other reasons, the opportunity to snag Schmidt?
That, agrees Dravis, is a distinct possibility. "If I came in and saw the press release saying Novell had been bought I wouldn't be surprised," says Dravis, who rates Novell's shares a buy and praises its solid technology, loyal customer base, healthy new-product pipeline and the virtue of not being
Novell's stock, worth about 7 when Schmidt arrived in April 1997, closed Thursday at 24 1/8, down 2%.
: Broadband Internet service
is set to finalize its purchase of corporate neighbor
on May 28. That means reorganization plans are in full motion, and already some of the key assignments have been slotted.
Charles Moldow, head of the company's media operations since its inception and a former executive with @Home shareholder
gobbled up TCI -- is also a two-time entrepreneur and recovering investment banker.
Now Moldow will head the entity to be formed by combining Excite's
division with @Home's
unit, creating what he calls an "end-to-end, one-stop shop for advertisers and direct marketers.'' The merger partners bought their respective units last year. The companies specialize in helping advertisers better target their messages on the Web.
An @Home spokesman promises there are a bevy of interesting job assignments that will result from the merger, but he won't talk about them until May 28.
Incidentally, the market has continued to shine on this deal. The price tag for Excite has increased from $6.7 billion on Jan. 19, when the deal was announced, to $8.6 billion Thursday.
It's interesting to note that Marie J. Toulantis, 45, has been named chief financial officer of
, the online bookseller with $62 million in 1998 revenues that's currently trying to raise $300 million in an initial public offering. Toulantis's last job: CFO of
Barnes & Noble
, the $3-billion parent that's spinning off its .com progeny.
Toulantis is a former commercial banker and has been with the book retailer since 1997. She wasn't available to chit-chat Thursday because she was in Minneapolis on barnesandnoble.com's roadshow, the series of closed-to-the-press meetings IPO candidates have with prospective investors.
Isn't it just a wee bit surprising that the big company's CFO would ditch her job for the same post at the tiny offspring? No, of course not. Toulantis is going where the action -- and options -- are.
Where the Internet is concerned, nothing should surprise anyone anymore. It wouldn't even be shocking if Toulantis one day presides over barnesandnoble.com buying Barnes & Noble.
Adam Lashinsky's column appears Mondays, Wednesdays and Fridays. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a monthly column for Fortune called the Wired Investor, and is a frequent commentator on public radio's Marketplace program. He welcomes your feedback at