iPhone 14 Wish List 'House of the Dragon' Review Xbox Game Pass Ultimate Review Car Covers Clean Your AirPods 'The Rehearsal' on HBO Best Smart TV Capri Sun Recall
Want CNET to notify you of price drops and the latest stories?
No, thank you

SGI spinoff readies IPO

The company may spin out MIPS as early as next week in a public offering and sell its Cosmo Software unit to Sony.

Silicon Graphics may spin out its MIPS business as early as next week in an initial public offering and sell its Cosmo Software unit to Sony.

The anticipated divestitures are part of SGI's restructuring plans announced last spring, in which the company said it would exit areas outside the core business and cut its workforce by nearly 10 percent. The workstation maker plans to focus on making servers and supercomputers with Intel microprocessors and target six industries: communications, energy, entertainment, government, manufacturing, and science.

MIPS, SGI's chip design business for embedded products, had been expected to go public this week, but IPO watchers said today it has been pushed back to next week, according to Kathleen Smith, portfolio manager for Renaissance Capital's IPO Fund.

"I don't see any reason why the MIPS deal won't get done," Smith said, noting that its earlier delay should not raise any concerns.

MIPS, which plans to float out 5.5 million shares, has an IPO price range of $12 to $14 a share. Smith added MIPS may eventually set its target price at the high end of the range, given the strong performance of its competitor ARM Holdings, which went public last April at $29.17 a share and closed today at $48 a share, up 0.3750 over yesterday.

Constance Sweeney, a MIPS spokeswoman, said an IPO next week would be consistent with the company's earlier stated plans to go public by the end of June.

Meanwhile, it's not yet known whether MIPS will lock in a deal to help develop Nintendo's next-generation gaming platform. It now holds a licensing agreement to supply the graphics and microprocessor chips for the Nintendo 64, which accounted for 76 percent of its revenues during the second half of 1997.

Artx, a start-up graphics chip designer, clinched a deal with Nintendo to develop the graphics hardware for its next-generation game box. In addition, the company will play a role in selecting the microprocessor partner for Nintendo.

MIPS, Artx, and SGI--which earlier had filed two trademark lawsuits against Artx and some of its executives, who are former SGI employees--entered into a memorandum of understanding recently, according to Sweeney. That memorandum allows SGI to reopen its lawsuit at a later date if needed.

In the meantime, the three companies and Nintendo have entered into discussions that "can be mutually beneficial," Sweeney added. She said it's not yet known whether an agreement will be reached to use MIPS microprocessors.

As part of its restructuring plans, SGI has signed a letter of intent to sell its 3D graphics unit, Cosmo Software, to Sony, said Gina Morkes, an SGI spokeswoman.

"We hope to sign a definitive agreement shortly," she added, noting that such an deal could occur within a couple of weeks.

Morkes declined to disclose any terms or purchase price being discussed for Cosmo, a developer of VRML (virtual reality modeling language) for the Web.