Rambus, Inc. (



Q4 2011 Earnings Call

January 26, 2012 - 5:00 p.m. ET


Harold Hughes – President and Chief Executive Officer

Satish Rishi – Senior Vice President and Chief Financial Officer

Thomas Lavelle – Senior Vice President and General Counsel

Sharon Holt – Senior Vice President and General Manager, Semiconductor Business Group


Mark Strouse – JPMorgan Securities, LLC

Michael D. Cohen – MDC Financial Research, LLC

Hamed Khorsand – BWS Financial, Inc.



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Good day, ladies and gentlemen and welcome to Rambus Incorporated fourth quarter 2011 earnings conference call. (Operator Instructions) As a reminder, this conference call may be recorded.

I would now like to hand the conference over to Mr. Satish Rishi. Sir, you may begin.

Satish Rishi

Thank you, operator and welcome to Rambus fourth quarter and 2011 year-end conference call. I'm Satish Rishi, CFO, and on the call today are Harold Hughes, our President and CEO; Tom Lavelle, Senior VP and General Counsel; and Sharon Holt, Senior VP and General Manager of the Semiconductor Business Group.

The press release for the results that will be discussed here today have been filed with the SEC on Form 8-K. A replay of this call will be available for the next week at 855-859-2056. You can hear the replay by dialing the toll-free number and then entering ID number 44751731 when you hear the prompt.

In addition, we are simultaneously webcasting this call, and along with the audio we'll be webcasting slides. So if you're joining us via conference call, you may want to access the webcast with a slide presentation. A replay of this call can be accessed on our website beginning today at 5:00 p.m. Pacific Time.

In an effort to provide greater clarity in our financials, we are using both GAAP and non-GAAP pro forma financial formats in our press release and our conference call. I need to advise you that the discussion today will contain forward-looking statements regarding our financial prospects, pending and current litigation, and demand for our technologies, among other things.

These statements are subject to risks and uncertainties, which are more fully described in the documents we filed with the SEC, including our 8-Ks, 10-Qs and 10-Ks. These forward-looking statements may differ materially from our actual results, and we are under no obligation to update these statements.

Further, as mentioned, we will discuss non-GAAP financial results today and have posted on our website reconciliations of these non-GAAP financials to the most directly comparable GAAP measures. You can find a copy of our earnings release and the recon on our website at www.rambus.com on the Investor Relations page, under Financial Releases.

Now, I'll turn the call over to Harold.

Harold Hughes

Thanks Satish, and good afternoon, everyone.

Overall, 2011 was a mixed year for Rambus. While we had some disappointing court results, particularly the CSC decisions with Hynix and Micron cases, as well as the price-fixing case in San Francisco. We ended the year on a very positive note with $83.4 million in Q4 revenue. This brought our annual revenue to $312.4 million, beating our plan. The run rate for our bus is certainly growing as we ended the year -- as we ended 2011 at a higher run rate than at one which we started the year.

From a licensing perspective, we signed or re-signed a number of key patent license agreements during the year, including Toshiba, Panasonic, Freescale, Broadcom, as well as an important smartphone and tablet manufacturer. The agreement with both Freescale and Broadcom are important as they settle the outstanding claims with these companies, in both the ITC matter as well as the individual district court cases, including the resolution of the past use of patented innovations.

In addition, we have signed a forward-looking license agreement with both Freescale and Broadcom which underscores the value of our patents for the future. At our core, we are a company of inventors and we finished 2011 with 1.386 patents and other 1,059 pending applications. This is roughly a 20% increase over the previous year. Throughout 2011, we continued to innovate in all our key areas, semiconductors, lighting and display, as well as our newly acquired security business.

On the semiconductor side, we introduced a revolutionary new clocking, using fast power-on technology. We'll be showing a silicon-based demonstration of this technology next week at DesignCon. We will also be continuing the showcase of our technology leadership position by presenting a remarkable 10 papers at DesignCon on a variety of topics, including power management, single-ended high-speed signaling, and securing mobile devices through cryptographic techniques.

In addition, we are engaging with the Industrial Technology Research Institute (


) in Taiwan, which is one of the world's leading research institutes. This engagement will be focused on the development of interconnected 3D packaging technologies. And, as part of this agreement, we have joined the Advanced Stacked-System Technology and Application Consortium. This is a multinational research association led by ITRI.

During the course of 2011, we continued to execute on our diversification strategy within both our Lighting and Display Technology group, as well as by our acquisition of Cryptography Research. Both of these groups have had a lot of activity in their respective areas, and I'd like to take a few moments to recap some of their highlights.

In May, our Lighting and Display division was proud to highlight the GE Lighting -- that GE Lighting demonstrated a new line of energy-efficient fixtures based on innovations. Our lighting innovations allowed designers to truly harness all of the advantages of LEDs.

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