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MIPS Technologies Inc. Message Board

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  • taexpert928 taexpert928 Sep 20, 2011 12:18 PM Flag

    Will Intel Buy MIPS? This could be why..

    SEPTEMBER 12, 2011, 4:30 PM ET
    MIPS: Starboard Mostly Right, Says The Benchmark Co.

    By Tiernan Ray

    Shares of microprocessor architecture licensing company MIPS Technologies (MIPS) today rose 31 cents, or 6%, to close at $5.48 after its largest investors, Starboard Value LP, said it sent a letter to the company’s CEO and its board of directors stating the stock is “deeply undervalued” and offering nominees for the board.

    Starboard, which claims to hold 9.1% of the shares outstanding, write that the stock has had a “dismal” performance since the company’s IPO in 1998 — down 69% since then, and down 37% in the last five years.

    “According to Starboard, this destruction in stockholder value is a direct result of the Company’s weak operating performance, deteriorating margins and poor capital allocation decisions around internal investments and poorly executed acquisitions,” the letter relates.

    Starboard nominated four directors and urges the company to “explore alternatives” to unlock the value of its chip intellectual property. It also urged the board to stop buying companies, which it says has been a failure, and instead spend money to buy back shares.

    The Benchmark Co.’s Gary Mobley this afternoon published a note to clients in which he concurs with many of Starboard’s points, while reiterating a Buy rating and an $8 price target.

    Many of the board members have been there since the IPO, notes Mobley, and “we have heard the board is one of the deficiencies of the company.” He agrees with the suggestion the company cease acquisitions and buy back stock.

    “We do, however, feel that MIPS should continue to invest in mobile,” writes Mobley. “While the company has not closed any tier-one mobile licensees, it has gotten some traction at the ground floor with 10 mobile licensees to date. Mobile represents a large addressable market and represents the most logical way for MIPS to expand outside of its historical digital home realm.”


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