MIPS buys GNU tools company

As revenues halve year on year, MIPS hopes that the purchase of UK-based Algorithmics Ltd will help revive its fortunes

Processor designer MIPS said on Thursday it has acquired the UK-based free development tool company Algorithmics Ltd.

The announcement came on the same day that MIPS announced a 44 percent decline in revenues for fiscal 2002, down to $47.8m from $84.9m in fiscal 2001. MIPS, which made a net loss in fiscal 2002 of $9.4m compared to a net income of $19.1m for the previous year, attributed much of the decline in fortunes to lower royalties from Nintendo 64 consoles, which are powered by MIPS-based processors.

The purchase of Algorithmics is part of a strategy to help MIPS' OEM and semiconductor customers to get to market more quickly with functional silicon based on its designs. Algorithmics licenses its development tools under the GNU free software licence, but also charges up to £7,850 a year for support. In addition to tools, it offers evaluation boards, training and contract design, and porting.

The acquisition of Algorithmics... complements our alliances with companies such as Green Hills Software, Microsoft, Wind River Systems and others," said MIPS chairman and chief executive John Bourgoin.

Despite this latest acquisition and a string of alliances, MIPS is finding the current climate particularly tough; Bouroin called the results "disappointing".

Chief financial officer Casey Eichler blamed pressure from customers to weight licensing deals differently. "Reflecting continued weakness within the semiconductor industry, our customers continued to opt for lower up-front per-use licensing fee deals rather than the higher up-front unlimited use fee licences which were more frequently selected prior to the downturn," he said. However, he added, MIPS signed eight new licence agreements during the fourth quarter, which matched last quarter's number. "We continue to manage our spending levels in light of the current conditions."

MIPS and its subsidiaries will hire all Algorithmics employees, continue Algorithmics' existing business, and also acquire the affiliated company DFS3 Limited. Terms of the transaction were not disclosed. Algorithmics was founded in 1988 by a group of MIPS veterans.

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