Rambus Reprises Litigation Blues

Besides the cases involving Samsung, Rambus has litigation ongoing against Micron Technology(MU) and Hynix. Those cases have yet to settle and continue to wend their way through the court system.

In addition, many investors don't realize there is another development on the horizon that could affect Rambus' relationship with Samsung: The Department of Justice is conducting a price-fixing investigation into memory-chip manufacturers that covers the period from 1999 to 2002 -- the same period during which Rambus alleges its technology was forced out of the market by illegal collusion of the memory chipmakers.

In the past nine months, both Hynix and Infineon have pleaded guilty to illegally fixing prices during this period. The pleas also involved nine-figure settlements for both companies and a pledge to cooperate in an ongoing investigation.

Specifically, Hynix agreed to cooperate with the Justice Department not only on the DRAM technology but also RDRAM, which is Rambus' central technology that it is alleging was forced out of the market.

Samsung and Micron are also targeted in the probe, but with Micron repeatedly saying it doesn't expect to pay any penalties, Samsung could be left as a remaining target.

Danforth declined to comment specifically about the DoJ's investigation, but he did say that any progress the government makes in proving its case should be good for Rambus. "We think the impact is positive as more guilty pleas come in -- and we expect more to come," he said.

Investors have been waiting six months for a turnaround in a stock that was climbing toward $30 in December -- and clearly patience is wearing thin. The stock fell in March after traders questioned the deal with Infineon before Tuesday's slide when a deal with Samsung couldn't be reached.

Danforth says the company needed to move past the Infineon litigation, which accounts for only 12% of the DRAM market, and focus on the other 88% of the memory market For Rambus, the suit against Samsung -- the biggest player in DRAM -- is a necessary component of that strategy.

For investors, it means additional time for Rambus to prove its case, and possibly a more robust payoff in the end.

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