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Businessweek Archives

Mips: A Chip On The Old Block

In Business This Week: HEADLINER


While Silicon Graphics has faltered in the workstation business--sales are off, earnings are disappointing, and it needs a new strategy and CEO--the Mountain View (Calif.) company has one success story: the MIPS microprocessor division. Thanks to strong sales of MIPS chips for Nintendo 64 game machines and other noncomputer uses, MIPS has nearly half the market for RISC chips.

Now, SGI is preparing to spin off MIPS into a publicly traded company. In coming months, SGI wants to sell a 20% stake of MIPS in an IPO and ultimately sell the rest in hopes of raising $500 million, say insiders. The move may be best for both SGI and MIPS. Analysts say SGI can no longer justify the $60 million it spends yearly to fund new MIPS chips--given the rising power of Intel technology, on which new SGI machines will be based. MIPS can focus on chips for consumer gizmos. Says analyst James Turley of MicroDesign Resources: "MIPS would be very successful as a stand-alone company." Can SGI say the same?EDITED BY KELLEY HOLLAND By Peter BurrowsReturn to top

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THE GOOD NEWS: INTEL set new revenue and profit records for 1997. The chip giant announced on Jan. 13 that it earned $6.9 billion, up 33% from 1996, on revenues of $25.1 billion, up 21%. The bad news: Those results are chiefly the afterglow of a strong first half. Fourth-quarter revenues rose only 1% from 1996 and earnings fell 9%. And in a sign of growing competition and price pressure in the industry, Intel says first-quarter 1998 revenues will be flat and gross margins down. Intel got other mixed news the same day: The Federal Trade Commission said it wouldn't block Intel's planned acquisition of Chips & Technologies. But investigation of the buyout will be rolled into a larger, ongoing FTC probe of Intel's business practices.EDITED BY KELLEY HOLLANDReturn to top


SCIENTISTS ARE CLOSING IN on the fountain of youth--at least for cells. The Jan. 16 issue of Science reports that scientists at Geron Corp. and the University of Texas Southwestern Medical Center have been able to prevent the loss of DNA at the ends of chromosomes. Normally, every time a cell divides, it loses a little of this DNA--and when the DNA regions shorten enough, they signal a cell to stop dividing and die. It's doubtful that similar treatment could increase people's lifespans. But researchers hope the idea may help fight such ravages as vision loss, skin aging, and heart disease.EDITED BY KELLEY HOLLANDReturn to top


ON SECOND THOUGHT, PAUL FIREMAN won't resign, despite his pledge 19 months ago to step down this May if he didn't turn Reebok around. On Jan. 13, the chairman also warned that 1998 will be another tough year for Reebok because Nike will sell an oversupply of sneakers at fire-sale prices. Fireman's decision to stay comes despite weak performance. Reebok has steadily lost U.S. share to Nike and Adidas, and estimated 1997 profits are below 1996 profits of $139 million--and less than half 1994 profits.EDITED BY KELLEY HOLLANDReturn to top

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