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MIPS Technologies Inc. Message Board

  • t6rf5e4w3 t6rf5e4w3 Aug 2, 2010 12:15 PM Flag

    benchmark increases estimates ahead of earnings

    from Benchmark:
    MIPS Technologies is scheduled to report Q4 FY10 earnings after the close on Wednesday,
    August 4. Ahead of the earnings release, we are increasing our FY11 (ending June 2011)
    revenue and EPS estimates to account for better-than-expected royalty trends. Many of
    MIPS' royalty contributors including Broadcom, Entropic, Cavium, Netlogic and Atheros have
    reported recent strong revenue growth, which compels us to increase our royalty growth
    assumption for MIPS. Ahead of the MIPS' earnings release, we reiterate our Buy rating and
    $7.00 price target.
     Regarding Q4 FY10 royalty revenue (67% of total revenue), we do not expect much variance
    from guidance. Regarding Q4 license revenue (33% of total revenue); it is likely that actual
    results will come in toward the high-end of guidance. Given that the chip industry is doing
    well, system-on-chip (SoC) design starts have accelerated. SoC design starts are the
    ultimate driver of MIPS’ license revenue pipeline. We believe improving SoC design starts
    have elevated MIPS’ license pipeline to the highest level in several years.
     We have raised our FY11 revenue estimate by 130bp, and we have increased our non-GAAP
    EPS estimate by a penny (from $0.44 to $0.45). Assuming MIPS’ license pipeline remains
    robust, and assuming the company executes on its pipeline, we could raise our estimate
    once again. For now, we remain conservative with our license revenue estimates.

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