Silicon Graphics results rise; MIPS posts $12M loss in 1Q

Electronic News, April 27, 1992

MOUNTAIN VIEW, CALIF. -- Silicon Graphics Inc. (SGI) posted improved first-quarter sales and earning, while financial results worsened at its acquisition target MIPS Computer System Inc., attribute, in part, to less revenues from RISC licensees.

SGI posted earnings of $12.2 million, or 22 cents a share, up from a net of $3.1 million, or 7 cents a share, a year ago. Sales for the quarter totaled $184 million, up 38 percent from $133 million last year.

For the nine months earnings grew 55 percent to $35.8 million, or 61 cents a share, from $23.1 million, or 51 cents a share, for the like period a year ago. Sales for the nine months totaled $524 million, up 36 percent from $385 million.

"The year-over-year growth in revenues for both the quarter and the nine-month period is indicative of the underlying strength and momentum of our market," said SGI president and chief executive Edward McCracken.

Last month Silicon Graphics Inc. disclosed it plans to acquire MIPS Computer through a common stock trade (EN, March 16). Based on the terms of the deal, each of MIPS' 25 million outstanding shares would be swapped for 0.61 share of SGI's common.

SGI's common closed down 1/8 at midweek, at $15 1/8 -- at that rate making the proposed acquistion worth approximately $231 million. This is down considerably from the initial estimates of approximately $334 million under SGI's closing stock price at the time the deal was diclosed. The deal is expected to be completed by the end of June.

Meanwhile, MIPS posted a loss of $12.7 million for the first quarter ended March 31, as compared with earnings of $624,000 a year ago. Sales plummeted 46 percent to $23,7 million from $43.9 million.

MIPS noted that its licensing fees and royalties from its hardware and software dwindled to $2,508,000, or less than 15 percent of the $16,182,000 it gained from such payments in the like period a year ago.

In addition, technology revenues decreased by more than a third from $7,763,000 during the fourth quarter of 1991 -- the last full quarter before the disclosure of SGI's intention to acquire MIPS, the firm noted.

David Ludvigson, executive vice president, said "The revenue decline is principally due to deferrals in customer orders and licensing activity as a result of the announcement of our proposed merger with Silicon Graphics.

"We have met with many of our major customers to discuss the merger and we believe that revenue in the second quarter will improve," he added.