Analyst Sees MIPS Technologies (MIPS) Sold Soon

August 31, 2012 11:54 AM EDT Send to a Friend
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Price: $7.98 --0%

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    2 Buy, 3 Hold, 0 Sell

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Shares of MIPS Technologies (NASDAQ: MIPS) are higher after analysts at Benchmark commented on the possible sale of the company.

Following a recent visit with MIPS' management, licensees and others, analyst Gary Mobley came away with the continued belief "the company's assets will be broken up and sold within the next four months." He also said given the industry-wide speculation the company won't be around long, "it is imperative MIPS is sold sooner rather than later."

Benchmark said the most likely scenario includes a sale of the patents with a near-simultaneous sale of the design IP business to a strategic buyer.

On potential buyer, ARM Holdings (NASDAQ: ARMH), hasn't shown much interest, maybe because it doesn't want to confuse customers with two different processor architectures. However, "now that ARM has seen the patent license deal signed between MIPS and Broadcom, and given industry speculation that the MIPS patents are for sale, ARM may feel compelled to buy MIPS (in its entirety) in order to protect itself and licensees from patent litigation." CEVA Inc. (NASDAQ: CEVA) and Synopsis are two other potential buyers but are unlikely to move. The most logical strategic buyer of MIPS is Imagination Tech, the analyst said.

The firm's $10 price target "assumes MIPS’'580 patents are worth nearly $300 million from a patent troll, strategic buyer or defensive buyer". "In addition, there is value in MIPS’ design IP business (mostly the PV of the royalty stream) as well as the company’s $2.07/share in net cash," the analyst notes.

For an analyst ratings summary and ratings history on MIPS Technologies click here. For more ratings news on MIPS Technologies click here.

Shares of MIPS Technologies are up 3.7 percent Friday to $6.61.


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