MIPS Rumored Buyout May Be Fully Valued Already, Patent Wild Card (MIPS)

MIPS Technologies Inc. (NASDAQ: MIPS) is a small enough company that many investors do not even know about.  Shares are surging by 22% to $6.40 on the day on reports that Bloomberg has said that the firm hired Goldman Sachs to go find a buyer for the company.  Even after the pop the market cap is under $340 million according to Yahoo! Finance data.

MIPS says that it provides industry-standard processor architectures and cores for digital home, networking, and mobile applications. The move has created some 4+ million shares and that is already 5-times normal trading volume.

To show some of the problems here, the Thomson Reuters target is only $0.02 EPS for all of the fiscal 2012 which ends in June.  The 2013 target is only $0.13 EPS.  Revenues are only expected to be $61.4 million this year and $67.5 million in 2013.  What is interesting is that the consensus price target is only $6.63 and that is only a few percent higher than today’s adjusted price.  The company’s only saving grace is that the 52-week range is $3.87 to $10.95.

The company has $110 million in cash and short-term cash equivalents and it only lists its goodwill as $565,000 and its intangible assets are $1.88 million.

Here is the key… the patents!!!  We looked at the MIPS patent portfolio and it is extensive as you can see here.  What the value is depends upon who is looking at them.  Until this is confirmed, we would treat it as a rumor.

JON C. OGG