MIPS Technologies Reports First Quarter Fiscal 2006 Financial Results

Lower Contract Revenue with 20% Growth in Royalty Revenue

MOUNTAIN VIEW, Calif., October 20, 2005 - MIPS Technologies, Inc. (NASDAQ: MIPS), today reported financial results for its first fiscal quarter ended September 30, 2005. Revenue for the first quarter of fiscal 2006 was down by 18 percent compared to the same period a year ago, primarily as the result of delayed licensing decisions.

Total revenue for the first quarter of fiscal 2006 was $11.9 million compared to $14.6 million for the same quarter a year ago. Royalties were $8.1 million, an increase of 20 percent compared to $6.7 million in the same quarter a year ago. Contract revenue was $3.9 million, a decrease of 51 percent compared to $7.9 million in the comparable period in fiscal 2005. Net loss for the first quarter of fiscal 2006 on a generally accepted accounting principles ("GAAP") basis was $3.9 million compared to a net income of $3.1 million for the same quarter a year ago. GAAP net loss per share for the first quarter of fiscal 2006 was $0.09 compared to a net income per share of $0.07 on a fully diluted basis for the same quarter a year ago.

Beginning in the September 2005 quarter, the Company recognized equity-based compensation expense pursuant to the fair value method under SFAS 123(R). This expense was $6.1 million in the first quarter of fiscal 2006. First quarter of fiscal 2006 operating expense also included a one-time charge of $570,000 for acquired in-process research and development expense related to the acquisition of First Silicon Solutions (FS2) completed in September 2005. Non-GAAP net income for the first quarter of fiscal 2006, which excludes the effects of these items, was $1.3 million or $0.03 per diluted share compared to net income of $3.3 million or $0.08 per diluted shares for the same quarter a year ago, for which period the non-GAAP number excludes certain restructuring costs. A reconciliation of non-GAAP adjustments is summarized in the tables below.

"The growth in our royalty revenue is encouraging as the MIPS architecture continues to be the processor architecture of choice in key growth markets such as digital consumer and networking," said Casey Eichler, chief financial officer of MIPS Technologies. "We are disappointed however by the licensing revenue realized in the first quarter and are taking actions to strengthen and build up our pipeline of prospective licensees."

"Although our royalty growth indicates the resumption of a long term upward trend in the shipments of MIPS-Based processors, we recognize a need to take action to facilitate our return to licensing revenues at a level that supports our long term growth plans," said John Bourgoin, president and CEO of MIPS Technologies. "I'd like to emphasize that our engineering execution on our next generation products during the quarter was excellent. This is one of the keys to our long term growth, and it is on track. I'm also pleased with the acquisition of First Silicon Solutions during the quarter which broadens the MIPS offering and brings us a world class tools capability in support of our customers."

MIPS Technologies invites you to listen to management's discussion of Q1 fiscal 2006 results and Q2 fiscal 2006 guidance in a live conference call on October 20, 2005 beginning at 1:45 p.m. Pacific. Conference call number is 1-719-457-2650. Replay number is 1-719-457-0820 and will be available for five business days, beginning shortly after the end of the conference call. The access code is 1764953.

Q1 FY2006 Highlights:
From its inception over 20 years ago, the MIPS® architecture has represented innovation and performance. Today, MIPS Technologies and its licensees continue to lead in system-performance and innovative solutions for established and emerging markets. With multiple design teams actively developing the architecture, hundreds of successful implementations throughout the world, and a vibrant ecosystem of third-party tools and software-MIPS continues to be at the core of the user experience.

Following are selected press release headlines from MIPS Technologies, and the company's licensees, systems vendors and third party providers.

HDTV and DTV News

• Zoran Powers Acer's New Families of Digital Terrestrial LCD Televisions for Global Markets - Powered by MIPS-Based™ SupraTV CPU
  
• Toshiba Teams Up With Sigma on Linux Platform for Digital Multimedia Appliances; Utilizes the MIPS-Based™ Toshiba TX4938 CPU and Sigma Decoder
  
• Profilo Telra Integrates MIPS-Based™ ViXS Video Processor in its New Wireless LCD Television
  
• PLX, ViXS Develop First-Ever USB 2.0 Dual PC-TV Tuner Reference Design; Leverages ViXS' MIPS-Based™ Xcode II-L MPEG encoder
  
• Sigma Begins Sampling The Industry's First MIPS-Based™ Media Processor With Dual High-Definition Decoding of H.264, VC-1 and MPEG-2
  
• ATI Announces Highly Integrated Digital Television Solution for Consumer Electronics Manufacturers
  
• JVC Reaffirms ATI's Digital TV Technology Leadership; High-Definition Displays Feature ATI's MIPS-Based™ Xilleon 226 and other Products

Media Server and Gateway News

• Broadcom and Mediabolic Join Forces to Introduce MIPS-Based™ Turnkey NAS Media Server Reference Design for Manufacturers
  
• Pixelworks and AMD Collaborate on MIPS-Based™ Reference Platform Enabling Broadband Video, Voice and Data on 'Triple-Play' Set-top Boxes
  
• TI Highlights its Continued Success in the Residential Gateway Market; TI's Industry-leading MIPS-Based™ AR7 is the Most Recognized DSL CPE Solution Worldwide

Advanced DVD Player and Recorder News

• WISchip Launches MIPS-Based™ Personal Video Recorder and IP Camera Reference Designs

Set Top Box News

• Zoran MIPS-Based™ SupraTV CPU Powers Homecast's New Family of Satellite Set-top Box Models for Europe & Middle East
  
• Microsoft and Sigma Designs Pave the Way for Low-Cost IPTV Devices; MIPS-Based™ SoC Technology Stimulates High-Definition IPTV Services
  
• Zoran MIPS-Based™ SupraTV CPU Powers Grundig's New Family of Satellite and Terrestrial Set-top Box Products on display at IBC in Amsterdam
  
• Micronas Introduces Complete Software Stack for Digital STB; Fully integrated digital TV middleware for the MIPS-Based™ MDE 95xyD STB Chip
  
• ViXS MIPS-Based™ WaveTV Reference Platform Offers Unique Multi-Client Wireless Video Design for Television and Set-Top Box Manufacturers
  
• SBC Communications Selects MIPS-Based™ Motorola and Scientific-Atlanta as Set-Top Box Suppliers for SBC U-Verse TV
  
• Broadcom Announces New Family of MIPS-Based™ High Definition AVC/VC-1 Consumer Video Solutions at the CableLabs® Summer Conference

Broadband News

• ZyXEL Broadens IP DSLAM Family With Wintegra MIPS-Based™ Processors
  
• BroadLight's Newly Released BL2000 GPON System-on-Chip Incorporates MIPS® Processor

Data Communications and Networking News

• Cypress's network search engines to interoperate with Cavium Networks' OCTEON EXP Multi-core MIPS64® processor family
  
• Cavium Networks New MIPS-Based™ OCTEON™ EXP Processors: First Multi-Gigabit Integration of Control and Data Plane Processing for Networking & Storage Application
  
• Corecess Chooses Wintegra for Next Generation IP-DSLAM Line Card; Will Utilize MIPS-Based™ WinPath CPUs

VoIP News

• Trinity Convergence to Port its VoIP Solution to the MIPS32® 24KE™ Core Family
  
• Broadcom's MIPS-Based™ VoIP Solutions Now Available in TCL Communications Equipment VoIP Products
  
• Infineon Achieves a 300 Percent Growth Rate in the VoIP Market in 2004; Midas Communications Selects the Infineon MIPS-Based™ INCA-IP SoC for its Broadband Solution
  
• PMC-Sierra Announces the Availability of a MIPS-Based™ Carrier-Class VoIP Wi-Fi Broadband Router Platform
  
• NETGEAR Selects Centillium's MIPS-Based™ CPU to Speed Next-Generation Consumer VoIP Platform to Market
  
• Broadcom Recognized as the Fastest Growing Enterprise IP Phone Chip Supplier, According to IDC; With More Than Three Million MIPS-Based™ IP Phone Chips Shipped to Date

SOHO and Wireless News

• Profilo Telra Integrates MIPS-Based™ ViXS Video Processor in its New Wireless LCD Television
  
• Atheros Communications and China Netcom Broadband to Enhance Broadband User Experience in China; CNCBB to Feature MIPS-Based™ AR5006AP-G in New Access Points & Routers

Corporate News

• MIPS Technologies Expands Hard IP Core Family with High Performance Cores for Budget-Conscious SoC Designers
  
• MIPS Technologies Acquires First Silicon Solutions (FS2)
  
• K-Micro is First MIPS Technologies Licensee with MIPS32® 24K® Silicon
  
• K-Micro Introduces MIPS32® 24Kf™ Core-Based Computing Subsystem for SoCs
  
• CoWare and MIPS Technologies Win OCP-IP Outstanding Contributor of the Year Awards for 2005

Newly Announced Licenses

• Opulan Licenses MIPS Technologies MIPS32® 4KEc® Core
  
• Philips Licenses MIPS Technologies MIPS32® 4KEc® Core
  
• Actions Semiconductor Licenses MIPS32® Cores for Portable Multimedia Applications

Ecosystem News

• MIPS Technologies and Virage Logic Expand Alliance to Provide SoC Designers with Convenience of a Single License for MIPS® 32-Bit Cores and Virage Logic IP
  
• Express Logic and MIPS Technologies Bring ThreadX® RTOS Support to the MIPS32® 24K® and 4KE™ Core Families
  
• MontaVista Delivers "Real" Linux Alternative to Proprietary Embedded Solutions
  
• Denali Launches Blueprint, New Software for System-on-Chip Design
  
• Accelerated Technology's Nucleus EDGE Embedded Development Environment Supports MIPS Architecture

Financial Tables

Click here to read financial tables

MIPS Technologies, Inc.

MIPS Technologies, Inc. is a leading provider of industry standard processor architectures and cores for digital consumer and business applications. The company drives the broadest architectural alliance that is delivering 32- and 64-bit embedded RISC solutions. The company licenses its intellectual property to semiconductor companies, ASIC developers, and system OEMs. MIPS Technologies, Inc. and its licensees offer the widest range of robust, scalable processors in standard, custom, semi-custom and application-specific products. MIPS Technologies, Inc. is based in Mountain View, California, and can be reached at 650-567-5000 or www.mips.com.