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MIPS Technologies, Inc. (NASDAQ:MIPS)

F4Q10 (Qtr End 06/30/10) Earnings Call

August 04, 2010 4:45 p.m. ET

Executives

Jen Bernier - Public Relations Manager

Sandeep Vij - President & CEO

Maury Austin - CFO

Analysts

Gary Mobley - The Benchmark Company

Suji De Silva - Kaufman Brothers

Jeff Schreiner - Capstone Investments

Amy Norflus - Barclays Capital

Chris Sadalla

Paul McWilliams

Dean Fox

Operator

Good afternoon and welcome to the MIPS Technologies Fourth Quarter and Fiscal 2010 Financial Results Call. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I'll now turn the call over to Jen Bernier, MIPS' Public Relations Manager. Ma'am, you may begin.

Jen Bernier

Thank you, and welcome to the MIPS Technologies' fourth quarter and fiscal 2010 earnings conference call. I'm Jen Bernier, MIPS' Public Relations Manager.

Leading the call today are Sandeep Vij, Chief Executive Officer and Maury Austin, Chief Financial Officer. After they discuss the business highlights and detailed financial results, we'll open the call for Q&A. If you do not have a copy of the earnings release, it is available on our website at www.mips.com.

Before we begin, I would like to remind you that this conference call may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including projections of certain operating results for the first quarter of fiscal 2011.

Listeners are cautioned not to place undue reliance on this forward-looking information. Many important factors could cause the results to differ materially from those contained in such projections or forward-looking statements. We refer you to the risk factors section of the documents that we file from time-to-time with the Securities and Exchange Commission for factors that would cause the results to differ materially from our forward-looking statements.

In our financial discussions today, we will be referring to the fourth quarter and fiscal 2010 GAAP and non-GAAP results. MIPS' management believes that non-GAAP information is useful, because it can enhance the understanding of the company's ongoing economic performance. MIPS Technologies uses non-GAAP measures in evaluating its financial results, as well as for internal planning and budgeting purposes.

The non-GAAP discussed results include today FAS 123R stock option expense, certain costs and expenses related to acquisitions, divestitures, impairments and restructuring costs incurred during the period. Please refer to the earnings press release or to the Investor Relations page of our website for a reconciliation of GAAP to non-GAAP.

As a reminder, the playback number for this conference call is 203-369-0063, and the access code is MIPS. The recorded call will be available for 30 days after the call. An audio replay will also be posted on the Investor Relations page of our website at www.mips.com.

With that said, I will now turn the call over to Sandeep Vij.

Sandeep Vij

Thanks for joining us today. This marks the end of my second quarter with MIPS and we have made great stride in number of areas. Sales momentum is increasing, our pipeline continues to grow and our solution offering has significantly strengthened. All of these has resulted in record results, strong cash flow and a 37% operating margin, demonstrating the strength of our business model.

Examples of our strong positive momentum include Q4 revenue, which was up 33% over the prior quarter and licensing revenue which was up 100% over the prior quarter. This represents one of the best licensing quarters ever in the history of MIPS and underscores the traction how our solutions are having in the marketplace.

In Q4, MIPS experienced our highest quarter of royalty unit shipments ever. This is our fourth consecutive quarter of increasing royalty units with the last three quarters each being new records. For the year, we are over half a billion units shift, another all time record. Net income was up 87% over the prior quarter resulting in cash flow from operations of almost $9 million. Needless to say I'm pleased with these results, MIPS is showing strong momentum and increasing customer attraction across our key markets in the digital home, networking and mobile handsets.

Well we have new licenses in each of these areas this quarter including another win in mobile handsets. Amongst this quarters wins were 19 licenses for our multi-threaded processor cores showing the customer see the value of multi-threading and multi processing with MIPS. Customers can actually fit three of our multi-threaded, multi-core 10O4K in approximately the same die area as two single threaded cores from our nearest competitor, resulting in higher system performance and low power. MIPS multi-threaded cores helped our licensing Mobileye and achieve a 600% performance improvement over its previous ARM-based solution.

MIPS technical leadership in multi-threading, multi-core and 64-bit processor solution provides unique benefits for our licensees across a broad range of markets and application. MIPS business is divided into three main areas, the first of these is the digital home, this is a fast growing market with processing needs increasing rapidly driven by internet, connectivity and other emerging technologies.

MIPS holds the number one position in the digital home with the largest market share in digital television, set top boxes, and Blu-Ray players to name a few. Our royalty units were up by 39% quarter-over-quarter and 156% year-over-year in digital television, an example of the strength of MIPS in this market.

Networking including, wired and wireless networking is our second key market. Both areas are growing rapidly with increased shipments of cable modems and high end wireless LAN equipment that is addressed the increase in demand for internet connectivity and broad band access.

The higher download speed that consumers need to access HD multi-media content meaning the need for extra processing power is increasing exponentially. On the wired side our licensee is Cavium Networks and NetLogic are broadly replacing power PC-based free scale chips across the core of the network, and we already have the number one position in WiFi, with licensees including Broadcom, Atheros, Ralink, Realtek and Lantiq.

Q4 shipments and revenue of network routers and wireless associates reached a record high. Our royalty units were up 72%, year-over-year when network routers and wireless networking units were up 126% year-on-year.

As you know mobile handsets represent our third key market, this is a rapidly changing and dynamic market driven by Android, the move to LTE Networks and consumer appetites for smarter devices.

As I mentioned we added another licensee for mobile handsets this quarter. We continue to make fast progress on our building blocks and overall solutions for mobile including, regional technologies for things like handwriting recognition, voice recognition and mapping as well as carrier specific optimizations. We've already released the latest version of Android known as Froyo to early access customers and we'll make it generally available to all customers this month.

MIPS is gaining increasing traction and capitalizing on new opportunities across our key markets as the internet tsunami reaches consumer electronics. One is example of this is Google TV, which represents a great opportunity for MIPS and our licensees. Some of our largest licensees are actively preparing for Google TV. There will likely be tens of millions of marketing dollars spent on the initial Google TV effort and MIPS will pave the way for MIPS licensees and their customers to capitalize on this momentum. We've already seen this trend play out in the Blu-Ray market.

Initial Blu-Ray players were primarily based on Intel CPUs. But those systems were expensive, slow and targeted for early adopters. Today, the majority of the Blu-Ray players in the market include a MIPS CPU, offering lower power, lower cost implementations. We expect to see the same trend in Google TV.

Beyond our key markets, emerging areas for MIPS include microcontrollers and search storage controllers. PMC-Sierra is doing very well with its MIPS based storage SoCs that are inside products like HPs RAID-on-chip solutions.

On the microcontroller side, we're working very closely with our flagship customer Microchip who is experiencing increasing traction with its MIPS-based PIC32 MCUs. For microcontrollers and other cost and power sensitive applications, our M14K core family is among our most quickly adopted cores ever with nine licenses signed within its first three months of general availability. This quarter, one of our top licensees took a family license that includes using the M14K core across every piece of silicon they ship.

At the high end of our profit line, we're on track to soon announce a significant new product that will set new performance benchmarks for MIPS processors. This quarter's results underscore MIPS momentum and traction in the market place. Customers are strongly adopting MIPS solution. Their multi-year license agreements demonstrate the strength of our solutions roadmap. I am excited about the opportunities and see MIPS on positive growth trajectory going forward.

Maury will now discuss the details of the quarter and fiscal year.

Maury Austin

Thanks Sandy. As you've seen our Q4 revenue was well above the range of our guidance. As the licenses we see sold during the quarter had a favorable mix of longer term and we also sold the wider array of products that we had forecast. Consequently, our non-GAAP EPS was also well above the range of our guidance as our highly leveraged business model effectively converts all incremental revenue to incremental operating margin. As a result, we achieved $0.15 a share, pro forma EPS compared to our guidance of 0.6 - $0.7. We ended Q4 with cash and investments of 52.4 million, generating almost $9 million in cash from operations during the quarter.

Recall that we paid off our remaining debt of 8.8 million during the quarter as well. And we now have about $21 million more cash net-of-debt compared to this time a year ago and we expect that trend to continue. We ended Q4 with about $1.10 per share in cash. For the fiscal year ended June 30, total revenues were $71 million or an increase of $800,000 over the prior year. Non-GAAP net income per share was $0.38.

In spite of the recession under the general economic turmoil in the worldwide semiconductor market, it was a very good financial year for MIPS with four straight quarters as an improvement in all the significant financial metrics. For the fourth quarter ended June 30, total revenues were 23.3 million, a 33% growth over our third quarter and an 85% year-to-year increase.

Royalty revenue in the fourth quarter was 12.4 million, a sequential increase of 3% and a year-to-year increase of 62%. As near as we can tell, we are the only process or IT Company with four sequential quarters of royalty growth. Our licensees reported shipments of 143 million units during the March quarter or 6% higher than the previous quarter and 75% higher in Q4 last year. This quarter's royalty units represented yet another record amount of MIPS' products being sold into the marketplace.

For the year, we recorded 510 million units representing a year-to-year growth rate of over 19% with 53 MIPS' licensees reporting royalties during that quarter, the same as in Q3. Q4 license revenue was 10.9 million about double the 5.4 million reported in the prior quarter and 120% better than the 4.9 million reported in the fourth quarter a year ago.

Since, Sandeep's arrivals still at the higher end cores have accelerated significantly. Revenue associated with our two highest performing products have increased our 500% in the second half of the fiscal year as compared with the first half. We signed 13 new license deals this quarter, including four with customers new to MIPS.

And also during the quarter, we had a relatively small re-organization designed to balance our modestly increased future investments in R&D with lower cost in the G&A area. We incurred the restructuring charge of $700,000 during the quarter associated with that action.

Our Q4, GAAP operating expenses were15.6 million, an increase of 2.1 million over the prior quarter and effectively all of this increase was due to either that previously mentioned restructuring charge or the increased commission and bonus cost related to the dramatically increased revenue.

There's approximately to $870,000 in stock compensation expense and approximately $350,000 in depreciation and amortization included in our fourth quarter operating expenses.

Q4 tax provision was $1.4 million consisting mainly of state and foreign taxes and it was in line with our forecast.

Our GAAP net income from continuing operations for the quarter was 5.7 million or $0.12 a share compared with 3.1 million or $0.07 a share in the prior quarter and 2.7 million or $0.06 a share in the same quarter a year ago.

On a non-GAAP basis, net income from continuing operations in the fourth quarter was 7.2 million or $0.15 a share, compared with the non-GAAP net income of 3.9 million or $0.08 a share in the prior quarter and a non-GAAP net income of 5.5 million or $0.12 a share in the fourth quarter of last year.

Our Q4'10 non-GAAP operating margin percent climbed to 37% from 27% in the third quarter. Clearly, we have demonstrated we can achieve our long-term corporate goal of 35% plus, non-GAAP operating margins.

Looking forward to our fiscal '11, the wind seems to be at our backs. We currently estimate royalty units and revenue will growth fairly, linearly across the year. Barring a drop-off in consumer spending in the next four quarters, we'd expect our royalty revenue to grow approximately 10% year-to-year.

On the license revenue front, our sales pipeline continues to strengthen with increasing traction in all regions and all end application areas, as the result of the increased level of customer activity driven by Sandeep and the other executives, and the increasing Android and mobile traction.

It's in the depths of out pipeline we believe that out quarterly licensing revenue opportunity has effectively grown back to the 6 to $8 million per quarter range, as compared to the 4 to $6 million quarter range that we have been talking about for the last year or so.

Clearly as with our Q4 results some quarters will be larger than others, but we do feel that in a range of 6 to $8 million in quarterly licensing revenue, it's achievable over the coming year. On the spending side, we continue to modulate our spending to balance investments and new product opportunities with expected earnings.

We expect out pro forma FY '11 spending to increase modestly 2 to 5% over the next year, reflecting our continued investments in android and mobile technologies and Ethernet systems, offset to a degree by lower spending in the G&A areas.

We have proven over the last few years, we can manage spending to deliver earnings growth and significant positive cash flow. On the tax front we estimated our effective tax rate in the coming year to remain in the 22 to 23% range and using those above assumptions for Q1 '11, we'd expect our Q1 revenue to be in the range of 18.4 to 20.4 million, with non-GAAP EPS approximately $0.09 to $0.10 a year which is a little higher than the current consensus estimates.

For the year in total, we believe that street consensus estimates for revenue and EPS has a reasonable based on the current economic outlook for the global semiconductor markets. We will provide updates to our total year financial forecast as been progresses through the year.

And with that I'd like to open up the calls for questions, Operator.

Question-and-Answer Session

Operator

Thank you, (Operator Instructions), Gary Mobley, your line is open.

Gary Mobley - The Benchmark Company

Hi guys congratulations on the good result. My first question relates to what you just mentioned on the guidance front, Maury, I believe you mentioned 10% year-over-year for fiscal year '11 and given what your licensees are reporting for revenue, which would impact your next few quarters, it seems though 10% royalty revenue growth seems quiet conservative, I am just wondering that there is a dynamic in there such as the royalty threshold for some of your royalty players that may be met through out the year?

Maury Austin

No I think the -- what we're trying to do here is for the last four quarters, we had a sort of continually improving financial performance this quarter or last quarter we obviously blew it out. I think the numbers or royalty guidance at the moment may be, with benefit of hindsight to be conservative, that's we are standing here a year from now. But based on the visibility that we have right now we're trying to err on a conservatives side but based on our estimates for shipments, unit shipments over the next year assuming a mild ASP reduction we think 10% is a reasonable and conservative estimates of revenue growth on the royalty side.

Gary Mobley - The Benchmark Company

Okay, I have a couple of questions on the licensing front. For the quarter where there any ISA agreements and were there any OEMs that took license agreements that may be a further indication of other chip companies needing to take a license agreement?

Sandeep Vij

So, no on the first question, and I'm not sure that I understood the second question?

Gary Mobley - The Benchmark Company

Well, there has been a trend in the market place whereby OEMs have taken license agreements for processor architectures, were they be on the DSP front or the general purpose processor front. I'm wondering if you're seeing the trend as well, some of what you reported last quarter for your networking licensing?

Sandeep Vij

We're definitely seeing that trend. But the results of last quarter do not include an OEM license.

Gary Mobley - The Benchmark Company

Okay. All right. I'll hop back in the queue. Thanks guys.

Sandeep Vij

Thanks Gary

Operator

Suji De Silva, your line is open.

Suji De Silva - Kaufman Brothers

Hi guys, nice job on the quarter. I think, I believe at this last earnings call, you had some deals slipping into the June quarter. What was the magnitude of that and are there any similar effects in the September quarter?

Maury Austin

Suji, you're breaking up a little bit. I think the question was do these deals rolling in the quarter?

Suji De Silva - Kaufman Brothers

Yeah, what were the magnitude of deals rolling into the June quarter and then are there any similar ones for September?

Maury Austin

No significant deals rolling into next quarter from this quarter and I wouldn't say there was -- I would say $1 million roughly might have rolled out of last quarter, this quarter or deals that were in pipeline that didn't close in Q3, that closed in Q4.

Suji De Silva - Kaufman Brothers

Okay. And I have a question on the four new customers. I'm curious how long it took to explain those customers and whether it's a long lean time or whether we can expect maybe more new customers to MIPS to come on relatively rapidly. Just curious about that process.

Sandeep Vij

I would say typically the customers that we brought on are customers that we have been engaged with for anywhere between one to three quarters.

Suji De Silva - Kaufman Brothers

Okay. In other words (inaudible) All right, great. Thanks guys, I'll hop back in queue as well.

Operator

Jeff Schreiner, your line is open.

Jeff Schreiner - Capstone Investments

Yeah, hey gentlemen. Thank you very much for taking some questions this afternoon. Great job, bouncing back on the license side there. I was just wondering if we've reached a threshold where you now can maybe perhaps disclose the name of the large Asian customer that signed the license with you back in March.

Sandeep Vij

There is no revenue or threshold for us to be able to that. Our license agreements are fairly clear with our customers. In many cases, we have to wait for them to be able to announce their products and this is one of those cases. They will announce when it is appropriate for them to announce.

Jeff Schreiner - Capstone Investments

And just to refresh my memories Sandeep, you did displace your top competitor ARM, at that customer, correct?

Sandeep Vij

That's correct.

Jeff Schreiner - Capstone Investments

Were there any mobile licenses similar in size to that Asian customer or maybe what you perceive could be that magnitude as those products get up and ramping over the next few years?

Sandeep Vij

I'm going to kind of tend to believe from kind of size of customers. I think we made a very clear point last quarter about kind of an anchored customer. We're very pleased to have another customer in the fold and we're in discussion with several others.

So, I think we're pleased with the level of traction we have. We definitely are making the appropriate investments and have got the appropriate elements of the solution being rolled out and so we're going to continue reporting our progress in terms of the number of licensees that we have.

Jeff Schreiner - Capstone Investments

All right and last question you. Maury, if we kind of put and take on the guidance, you had about 2 million spread there I believe. Is it really just about closing some deals at the end of the quarter? Is that what we should really be thinking about in terms of may be at the low-end versus top-end?

Maury Austin

It's less timing and more, again we've talked about the business being lumpy. We can have a $0.5 million deal or we can have $5 million deal. For instance, whether one of those large deals hits or not is a difference between the high-end and the low-end of the range respectively.

Jeff Schreiner - Capstone Investments

Okay. Well, thank you very much for your time, gentlemen.

Sandeep Vij

Thank you.

Maury Austin

Thanks Jeff.

Operator

Amy Norflus, your line is open.

Amy Norflus - Barclays Capital

Hey. Thanks Sandeep for doing such a great job. Maury, you too. Congratulations. Can you kind of give us an idea when some of the licensing should hit the royalty and then give us a flavor of some of the contracts that you're signing on the licensing side?

Sandeep Vij

So typically the gestation between a licensed deal and royalty revenue is about three years. It might be longer on -- a little bit longer if it's a networking customer and it might be a little shorter if it's a mobile customer. So we should start seeing mobile, royalties late this year, early next year but typically with our -- some of the digital home customers its about a three-year gestation.

Amy Norflus - Barclays Capital

Most of the licensing in the current quarter, were they mobile or home?

Sandeep Vij

Home.

Amy Norflus - Barclays Capital

Okay. And can you give you us a flavor of some of the different types of licensing deals that you're seeing; tell us what -- what the interest is and what you've seeing and why you can go ahead and raise the guidance on the licensing business?

Sandeep Vij

I think -- from my perspective, what is clear is that we have got now our products position correctly out in the marketplace. We have reinvigorated the sales force and the engagement. We're not only visiting our traditional customers with kind of a renewed energy and an updated roadmap but also we're going after a number of new customers that we have not gone after before. And all those are reproducing very positive results. What we are showcasing is our technical advantages. We have the unique advantages of having multi-credit of course which our competitors do not have and we have a performance power and capability levels that the customers are finding very, very attractive.

Amy Norflus - Barclays Capital

So potentially let's say if you look at the total mobile market, currently you have a very, very small share. What do you forecast or what do you think, with this technology that you have, you believe you can get your share today in the mobile market?

Sandeep Vij

Also, we're making very positive headway in that area. We continue to add licenses that are using MIPS for both baseband and the applications processor. We're kind of backing away from putting very specific targets out there right now. We're pleased with the level of momentum that we're having in that area though and I think customers are pleased with the solutions they're seeing from us.

Amy Norflus - Barclays Capital

Great. Well, great job. Congratulations guys.

Sandeep Vij

Thank you very much.

Operator

Chris Sadalla, your like is open.

Chris Sadalla

Yeah hi this is Chris calling for Mike Crawford. Thanks or taking my call. Just, first question would be, how should we be thinking about free cash flow in relation to EBIDTA? In other words, what are the expected taxes, the CapEx and the working capital changes for fiscal year 2011?

Sandeep Vij

So we have very little CapEx. We have very little UMS, cash taxes or cash tax rates about 22% and we expect that to continue through at least our fiscal '11. So for the next four quarters at least, CapEx is fairly low. So depending on changes in the balance sheet $5 million a quarter, plus or minus a million or so would be a normal cash generation for the quarter. We generated almost 9 million last quarter but 5 or 6 million is a more typical quarter for the next three or four quarters. We'd expect to generate 20 to $25 million in cash in the next four quarters.

Chris Sadalla

Okay great thank you. And then looking out a few years what, do you think the relative contributions from the home, the networking, the mobile segment of the business could be?

Sandeep Vij

I would expect mobile to be the fastest growing area. That's because we're starting from of course a very low base there with very little business but we're very happy with the traction that we're getting. In the digital home and networking, we continue to the trends of are going very quickly. In our estimates if you add wired and wireless networking, it's now surpassed power PC as a processor of choice in the networking market and we're increasing share there quiet rapidly.

In the digital home market, we already have such a high market share. We expect ourselves to kind of grow with the market and if we're able to get a few more customers, grow the market share. But that will be more difficult to do given our very strong presence there.

Chris Sadalla

Alright, great. Thanks a lot.

Operator

Gary Mobley, your line is open.

Gary Mobley - The Benchmark Company

Hi guys got a couple of follow-up questions. Given the strength in license revenue for the quarter, did you drain the licensing pipeline and if not maybe you can give us some qualifying comments or some additional playground on the pipeline.

Sandeep Vij

Sure. I would say we did not drain the pipeline. For the last couple of quarters, we've been generally talking about an increasing depth and strength if the pipeline. I would it's as strong today as it was half way though last quarter, which is unusual -- a little bit unusual and I would say in all regions we had some success in regions last quarter that have been pretty quiet for the last, almost a year.

So when I mentioned sort of a strengthening pipeline in all regions and in all end application areas, it's really a pretty broad based recovery. I think that has got something to do with Sandy's comment on product positioning and I also mentioned that our, high end product range is selling much better today than it was a year ago. Some of that is the positioning Sandy talked about.

So I think some of the strength is macro economically based if you will in some of the regions and then the other part is the product positioning and increased customer interactions that Sandy has lead with our VP of sales and effectively the whole sales force.

Gary Mobley - The Benchmark Company

Okay. And your backlog of revenue recognition increased sequentially in the quarter, correct? And that's indicative in the increase in deferred revenue? Am I looking at that correctly?

Maury Austin

Correct.

Gary Mobley - The Benchmark Company

Okay. And now that you get $50 plus million in cash and are generating 20 million per year plus some free cash flow, if you had to make a choice right now, would you make an acquisition or would buyback stock and/or repurchase shares? I'm sorry, pay dividend or buyback stock?

Maury Austin

My opinion would be, the first order preference would be a stock buyback. I'm not a fan of dividend but I am not a fan of all cash acquisitions.

Gary Mobley - The Benchmark Company

Sandeep, you care to chime in on that?

Sandeep Vij

We're currently looking at of course the different strategic options. Job one was very clearly to get sales momentum up and on track, number one. Number two is get a roadmap that both ourselves and our customers are very happy with. I am very pleased with the progress of those two items. And now, we will start looking at other strategic topics that will be one of the ones but I haven't decided on that yet.

Gary Mobley - The Benchmark Company

Thanks guys.

Operator

(Operator Instructions). Paul McWilliams, your line is open.

Paul McWilliams

Hi guys. Thank you for taking my question and congratulations on the quarter by the way. Got just a couple of items here. When do you expect we'll see the first applications processors or smart phones hit the street?

Sandeep Vij

I believe you will see that early part of next year.

Paul McWilliams

Excellent. First half then?

Sandeep Vij

Yes.

Paul McWilliams

Okay. In the base band area, do you see that the multi-mode phones that we're going to have to accommodate 4G, various tones of 4G and 3G and so on is a driver that gives you advantage over incumbance.

Sandeep Vij

Yeah, absolutely. I think the processing capability we have for die size; this is a very significant advantage. Being able to have the low power levels that we have is also an advantage and customers are seeing that.

Paul McWilliams

Excellent. Speaking about the low power, with the mobile applications being the emerging market for you and not your incumbent market, are you taking steps in your product roadmap to increase the granularity of power management on your chips?

Sandeep Vij

The answer is yes on the roadmap. But we have an advantage and it'd be inherent elegance and efficiency and simplicity of the MIPS architecture, when implemented on low power processes provides an advantage in power consumption.

Paul McWilliams

Wonderful. One last question here, how are you going about or are you addressing the need to manage interrupts in a low power method?

Sandeep Vij

Okay. Well I guess the key element where we're getting really technical here but I think the key element is that, whenever you have -- if you're trying to turn off and on different portions of the chip or different ports of the processor, when we have an interrupt, we want to make sure that we have a very fast wake up time.

Paul McWilliams

Well, I've heard of some people looking at dealing interrupts, other than keeping the core processor away. Do you have any techniques that you're looking at there to manage and monitor interrupts?

Sandeep Vij

No. We're actually have a number of things on the drawing board right now but probably more detail than we want to get into right now.

Paul McWilliams

I appreciate that. Maybe we can follow up when it's convenient.

Sandeep Vij

Sure.

Paul McWilliams

Thank you again.

Sandeep Vij

Thanks.

Operator

Dean Fox, your line is open.

Dean Fox

Thanks Sandeep, thanks Maury, great job. Just a couple of questions. Maury, you referenced 6 to 8 million in a quarter. Sandeep overtime, is there a reason to think that that's a limit as to what you can do in licenses on a quarterly basis or is that simply a function of your pipeline and where you are in terms of evolving your product strategy?

Sandeep Vij

That's what we kind of feel where the pipeline is then how we see our product strategy evolve right now. Do I think that's an upper limit? I don't believe there's an upper limit. I think that there's an increasing need of four processors across the wide variety of -- even a increasingly wide variety of semiconductor products and that will be one of the limits we'll be testing and it will be out in a few years.

Dean Fox

In terms of the 13 deals that you did, Sandeep, I guess it was mentioned that a lot of them are the higher end processors and you referenced sort of the competitive dynamic of some of your new products relative to your competitions. Is that -- are we going to continue to see that being the differentiator at least for the next 12 months?

Sandeep Vij

Oh, yes, I believe so.

Dean Fox

Okay, great job. Thanks gentlemen.

Maury Austin

Great. Thanks.

Sandeep Vij

Okay, let's go ahead and close the call. Again, thanks for joining us today. Q4 was a very positive quarter for MIPS and fiscal 2010 results were quite promising. We have a good pipeline of opportunities going forward in key markets and emerging growth areas. Renewed confidence from existing customers is apparent. We are focused on growing our customer base, looking to new markets and opportunities and we are winning new customers.

One-third of our licenses this quarter were with new licensees. The industry seems to have turned the quarter as evidenced by the growing volumes of customer shipments and the increase level of design activity we are seeing among our licensees. We look forward to updating our investors on how these trends positively impact our financial and business prospects over the coming year. Thank you all.

Operator

Thank you for participating in today's conference. You may disconnect at this time.

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