Rambus Reprises Litigation Blues

Investors in Rambus(RMBS Quote) have become skittish again after the company launched a patent infringement lawsuit against Samsung Electronics, the world's largest memory chipmaker and a significant Rambus customer.

Traders were left to conclude that yet another lawsuit means the company's legal battles are far from over. Shares dropped nearly 6% on Tuesday; they recently rebounded 0.7% to $14.85 in midday trading Wednesday.

But while Rambus' new litigation -- the result of the failure to reach a contract extension with Samsung -- is less than ideal, the alternative was even less appealing, according to Rambus General Counsel John Danforth. He said investors should recognize that Samsung was paying less than what it has agreed to pay under an existing license contract, a situation that resulted in Samsung losing its status as a customer supplying 10% of Rambus' revenue.

"They've been in breach for months and months," he says. "They are a huge part of the memory business, but they are not a huge part of our revenue, proportionately, and that situation needs to get fixed." ...