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Response Letter to the SEC

 [Mercury Computer Systems Letterhead]

 March 29, 2005

 VIA EDGAR AND OVERNIGHT COURIER

 Mr. Daniel Gordon

 Branch Chief

 Division of Corporation Finance

 Securities and Exchange Commission

 450 Fifth Street, N.W.

 Washington, DC 20549

Re:
Mercury Computer Systems, Inc.

Form 10-K for the fiscal year ended June 30, 2004 Filed September 10, 2004

Form 10-Q for the quarter ended December 31, 2004

File No. 0-23599

 Dear Mr. Gordon:

 This letter is submitted on behalf of Mercury Computer Systems, Inc. (the “Company”) in response to the comments of the staff of the Division of Corporation Finance (the “Staff”) of the Securities
and Exchange Commission (the “Commission”) raised in your letter of March 1, 2005 to Robert E. Hult, Senior Vice President and Chief Financial Officer of the Company (the “Comment Letter”). For reference purposes, the text of the
Comment Letter has been reproduced herein with responses below each numbered comment.

 The Company will file amendments to its Form 10-K for the fiscal year ended June 30, 2004 (the “Form 10-K”) and Form 10-Q for the fiscal quarter ended December 31, 2004 (the “Form 10-Q”) in response to the Staff’s
comments nos. 3, 5 and 6.

 Form 10-K as of June 30, 2004

 Note G – Acquisitions – Page 53

 Comment 1:

 We note your disclosure that you believe the acquisition of TGS “will expand the breadth of the Company’s product offerings in
the Image and Visualization Solutions Group markets.” We also note your disclosure on page 55 that the pro forma results of operations assuming TGS had been acquired

 Mr. Daniel Gordon

 Securities and Exchange Commission

 March 29, 2005

 Page 2

July 1, 2003 would not differ materially from your operating results as reported. We note you have similar disclosures relating to your acquisition of
Advanced Radio Corporation in this Form 10-K and relating to your acquisition of Momentum Computer Group in your December 31, 2004 Form 10-Q. Given these statements, it is unclear why these purchases resulted in relatively minor amounts being
allocated to intangible assets, with relatively large amounts recorded to goodwill. Based on your disclosures, it appears that the value of these acquisitions rests with the product offerings of the acquired companies and therefore you should have
allocated a greater amount to intangible assets in accordance with paragraphs 37(e) and 39 of SFAS 141. Please supplementally tell us why you did not allocate a greater amount to any intangible assets, including those listed in Appendix A14 of SFAS
14. Tell us why the purchase resulted in such a significant amount being recorded to goodwill.

 Response 1:

 The Company supplementally advises the Staff of the following information pertaining to its allocation of the purchase price between the acquired tangible assets,
intangible assets and goodwill for each of the following separate business acquisitions completed within the past twelve months: TGS Group (“TGS”); Advanced Radio Corporation (“ARC”); and Momentum Computer, Inc.
(“Momentum”). For each acquisition, the Company followed the guidelines set forth in Statement of Financial Accounting Standards No. 141, Business Combinations, relating to the identification and valuation of the tangible and
intangible assets. A detailed description of the process that the Company followed in this regard for each acquisition is provided below.

 In overview, the Company believes that its purchases of TGS, ARC and Momentum resulted in the allocation of considerable amounts to goodwill, and conversely did not
result in the allocation of greater amounts to identified intangible assets, because of the significant synergistic and strategic benefits that it expected to realize from each acquisition and that were not considered in the valuations of the
identified intangible assets that the Company acquired. The Company believes that it, unlike other market participants, had unique opportunities to generate revenues and profits through (1) its ability to integrate the acquired technologies into the
Company’s technology, thus offering its customers a more comprehensive technology solution and (2) its ability to expand the target company’s customer base through use of the Company’s sales channel. Such perspectives were discussed
with the Company’s Board of Directors as the strategic rationale for the acquisitions, and the quantification of these synergies was reflected in the financial projections that were used to support the purchase price the Company negotiated for
each acquisition.

 In contrast, the Company’s valuations for identified
intangible assets only reflected assumptions likely to be used by market participants. Purchase consideration related to synergistic or strategic benefits in excess of what may have been realized by market participants was not included in the
valuation of intangible assets, consistent with the guidance of SFAS No. 142, Goodwill and Other Intangible Assets, and the AICPA’s practice aid, Assets to be Used in Research and Development Activities (the “AICPA’s
practice aid”). As a result, such buyer-specific synergies are reflected as a component of residual goodwill.

 Mr. Daniel Gordon

 Securities and Exchange Commission

 March 29, 2005

 Page 3

 The major assumptions utilized in the Company’s valuations for intangible assets were based on: (1) information
about the target company on a stand-alone basis, largely as provided by the target’s management; (2) results from the Company’s diligence process; and (3) a determination as to what, if any, further synergies market participants would be
able to achieve.

 In each business case that management presented to the
Company’s Board of Directors as part of the acquisition approval process, the Company estimated the value of the target company on a stand-alone basis and with Mercury-specific synergies, while explicitly considering the costs to achieve these
synergies. By valuing synergies expected to be realized by the Company, the analyses provided support for the purchase price as well as the estimated level of goodwill.

 Identification of Intangible Assets to be Valued

 In order to identify properly all intangible assets acquired for consideration in the
purchase price allocations of TGS, ARC and Momentum, for each acquisition, the Company obtained and read the following key documents and information:

•

Technical due diligence reports prepared by the Company’s engineers and management, based in part on interviews the Company conducted with the target company’s senior
engineers and management;

•

The target company’s website, product marketing literature and other publicly available information;

•

Legal and financial due diligence reports prepared with the assistance of the Company’s outside advisors;

•

The target company’s historical balance sheets and historical and projected income statements;

•

The term sheet exchanged with the target company outlining the proposed transaction;

•

The final stock purchase agreement to effect the acquisition;

•

The Company’s press releases pertaining to the public announcement of the acquisition; and

•

The Company’s internal business case reviews and industry narratives reviewed by management and the Company’s board of directors.

 In the case of each acquisition, the Company was assisted in the identification and the
valuation of intangible assets by nationally-recognized independent appraisers that the Company engaged. The appraisers reviewed the key documents listed above and conducted interviews with select members of the Company’s due diligence team and
the acquired company’s management. Specifically, the appraisers interviewed those individuals who are directly responsible for the operations, technology development and marketing efforts of the Company and each acquired company.

 Mr. Daniel Gordon

 Securities and Exchange Commission

 March 29, 2005

 Page 4

 Using the listing of intangible assets examples in SFAS 141 (appendix A14) as a guide, the Company conducted a
thorough search of the documents noted above and interviewed key management to identify potential intangible assets, broadly including:

•

Marketing-related intangible assets, such as trade names and non-compete agreements;

•

Customer-related intangible assets, such as order backlog and customer relationships;

•

Contract-based intangible assets, such as license and royalty agreements; and

•

Technology-based intangible assets, such as completed technology and in-process research and development.

 Valuation Approach and Reasonableness

 The valuation approaches considered were the income approach, market approach and cost approach. Each of these customary and accepted
approaches has application to specific types of assets depending on the nature of the asset being measured and the ability of a buyer to replicate the asset in light of any legal protection it enjoys. Based on the characteristics of the individual
asset to be valued, the most applicable approach was selected.

 In general, the
reasonableness of key valuation assumptions used to value identified intangible assets (including revenue growth rates, operating expenses, obsolescence rates, tax rates and discount rates) was determined by a comparison of the stand-alone
projections of the target company (excluding Mercury-specific synergies) to the historical results of the target company, industry growth rates, and other benchmarking analyses, and through discussions with management of the target company and the
Company.

 TGS Group

 TGS is an interactive graphics software vendor that provides two-dimensional and
three-dimensional (“3D”) graphics software tools, utilities and applications. At the time of acquisition, it employed 70 people (including 22 engineers) and in its latest fiscal year ended September 30, 2003 had reported unaudited revenues
of $7.4 million and net income of $0.2 million. TGS has operated as a business for over 20 years.

 The Company acquired TGS as a first major step in moving up the value chain for its Medical Business Group. The acquisition is the beginning of the formation of a group around the concept of “3D Image
Understanding” that will be focusing on the development, design, patenting and marketing of a 3D platform, with an initial focus on a medical vertical market and related markets like bio-informatics. The Company already has a base of customers
in this space and intends to integrate the TGS technology platform into the Company’s platform and offer this combined 3D platform to its customers to gain incremental revenue.

 Mr. Daniel Gordon

 Securities and Exchange Commission

 March 29, 2005

 Page 5

 Intangible Assets Identified – TGS

 Through the intangible asset discovery process described above, the Company identified the
following potential intangible assets with respect to the TGS acquisition:

•

Completed technologies;

•

Maintenance relationships;

•

Customer relationships;

•

Trade names;

•

Customer contracts;

•

Non-competition agreements;

•

Order backlog; and

•

Licensing agreements.

 In addition, the Company considered the possible existence of (1) employment contracts and (2) in-process research and development, although the Company noted no evidence of their existence through its process to
identify potential intangible assets.

 Intangible Assets Valued and Not Valued – TGS

 In the
final purchase price allocation, the Company did allocate value to certain of the assets listed above as follows:

 Intangible Asset

Fair Value
(in thousands)

 Completed technologies:

 Open Inventor software

$
1,110

 Amira software

420

 Customer relationships:

 Maintenance relationships – Open Inventor

690

 Maintenance relationships – Amira

40

 Customer relationships from software licenses

660

 Customer A contract

100

 Customer B contract

100

 Licensing Agreement – Vendor A

350

 Trade name – Amira

50

$
3,520

 Mr. Daniel Gordon

 Securities and Exchange Commission

 March 29, 2005

 Page 6

 The Company did not allocate value to the following items, as they were determined to have a de minimis or no
value for the reasons noted below:

•

Non-competition agreements;

•

Order backlog;

•

Employment contracts;

•

Open Inventor and TGS trade names; and

•

In-process research and development.

 Non-competition Agreements – In connection with the acquisition, all employees of TGS signed non-competition agreements with the Company under which employees
who leave agree not to compete against the Company for a period of six to twelve months depending upon the employee’s position with the acquired company. Given the short time period and the low probability of any individuals leaving and
competing successfully against the Company, no value was ascribed to these agreements.

 In addition, five employees and one non-employee shareholder of TGS, as well as certain of their affiliates, signed non-compete agreements that extend for a period of 30 months following the closing date of the acquisition. The Company
believes the fair value of a non-competition agreement is based on the cumulative probability of an employee leaving, competing and successfully competing. Due to the compensation plans that the Company put in place for the key employees that will
provide them significant compensation if they remain employed with the Company for a 24- to 36-month period, the Company believes that the probability of those employees leaving is relatively low. Moreover, the time necessary to develop new,
competing software would reduce the likelihood of such persons successfully competing against the Company and the potential damage to the Company should they decide to compete. Consequently, the Company concluded that these specific non-competition
agreements had a de minimis value.

 Order Backlog – As of
the acquisition date, TGS had an inconsequential amount of order backlog. As a software company, TGS is typically able to fulfill orders in short notice, as the time needed to create and distribute software disks is very short. Since nominal backlog
existed at the acquisition date, no value was assigned in the purchase price allocation.

 Employment Contracts – No existing employment contracts were identified in the Company’s acquisition due diligence, and the Company did not enter into any new employment contracts with employees of
TGS hired as part of the acquisition. Consequently, no value was assigned.

 Open Inventor and TGS Trade Names – The Open Inventor trade name is owned by a third party and has been used by TGS for approximately ten years under a license agreement (which the Company separately valued and recorded as part
of the purchase price allocation). At the time of the acquisition, the Company expected to use the TGS trade name only internally for approximately six months, at which time the Company would discontinue use of the TGS name. For these reasons, the
Company did not ascribe a separate value to either of these intangible assets.

 In-Process Research and Development – The Company considered the AICPA’s practice aid to identify and account for in-process research and development (“IPR&D”). Through due diligence efforts, the

 Mr. Daniel Gordon

 Securities and Exchange Commission

 March 29, 2005

 Page 7

Company identified that TGS had two completed software products, Open Inventor and Amira, and had no unrelated research and development projects under
development. As of the acquisition date, Open Inventor 4.0 was the current version of the product and its successor, Open Inventor 5.0, was substantially complete with no remaining technological risks. Therefore, the Company considered Open Inventor
5.0 to be part of the Open Inventor completed technology that it valued, and not IPR&D. Open Inventor 5.0 was commercially released shortly after the acquisition date.

 With respect to the Amira software product, Amira 3.1 w