Price cut in offer for MIPS: Silicon Graphics pares terms of deal

Article Abstract:

MIPS Computer Systems Inc's weak 1st qtr 1992 results have lowered the price set for its acquisition by Silicon Graphics Inc from $400 million down to $208 million. Analysts see this as an indication of the poor condition of the Advanced Computing Environment (ACE) consortium, which has been working toward standardizing microcomputer microprocessors based on the MIPS design. ACE is jeopardized by the separate plans by Compaq to develop its own workstation based on the MIPS chip and DEC's increasing lack of involvement in ACE. MIPS poor 1st qtr showing is an indication that it is not strong competition for Intel Corp and its products. Silicon Graphics has suffered from its association with MIPS, seeing its stock value decline from $26.625 to $16 a share since the merger announcement. MIPS losses for the 1st qtr are $12.7 million, compared to $624,000 in earnings in 1st qtr 1991.

Management, Consortia, Price, Acquisition, Financial Stability, Losses, Consortium, Advanced Computing Environment

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Silicon Graphics to buy MIPS for $406.1 million

Article Abstract:

Silicon Graphics Inc is buying MIPS Computer Systems Inc in a stock swap worth $406.1 million. Silicon Graphics produces workstations for engineers, architects and movie artists, and MIPS designs microprocessors that function in many workstations, including the ones offered by Silicon Graphics. MIPS has had trouble managing personnel and has reported inconsistent profits. The merger will allow Silicon Graphics to produce its own chip, which is important for companies that want to sell workstations. Silicon Graphics' stock will devalue in the short term as a result. MIPS will become a wholly owned subsidiary of Silicon Graphics and will be headed by MIPS' President and CEO Robert C. Miller. The merger should bring the combined companies annual revenues of about $1 billion.

Revenue, Strategic Planning, Merger

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