Updated from 9:53 a.m. EDT

Late Wednesday, Rambus ( RMBS)reported a 16% jump in first-quarter sales and a nearly 63% increase in profit, thanks to a one-time gain. But the firm's top-line results still fell slightly short of analyst expectations.

Shares of Rambus were recently down $2.70, or 9.5%, to $25.73.

Under generally accepted accounting principles, Rambus reported net income of $8.3 million, or 7 cents a share, in the first quarter, including a $2.1 million after-tax gain on an investment sale. That compared with net income of $5.1 million, or 5 cents a share, in the same period a year earlier and beat by a penny the average of two analyst estimates gathered by Thomson First Call.

Revenue totaled $32.5 million in the first quarter, up 16% from a year ago and up 1% from the previous quarter but modestly shy of the $32.9 million consensus estimate.

The company's guidance called for revenue in the range of $32 million to $35 million.

American Technology Research analyst Erach Desai figured that the one-time gain in the first-quarter was worth a penny, so Rambus' bottom-line results were actually inline with estimates. Overall, Desai called the earnings and guidance "lackluster," which could help explain Thursday's selloff.

"This stock doesn't trade on near-term fundamentals," Desai noted. "The stock trades on legal events," and there are no legal catalysts until at least June, when a retrial of Rambus' patent litigation suit against semiconductor company Infineon ( IFR) begins. That adds up to a "good reason to sell off on an ugly market day," added Desai, who has a buy rating on Rambus. (His firm doesn't have an investment banking arm.)

Looking further out, if Rambus succeeds in court in winning royalties from more chipmakers, the firm's earnings could skyrocket to $1.40 in 2005 and $1.70 in 2006 from about 25 cents this year, Desai said.

Rambus licenses technology used in memory chips, but often attracts more attention for its legal fights. Earlier this year the company scored one legal coup when an administrative law judge overturned government antitrust allegations dating back to the early 1990s. The case centered on a special type of computer memory Rambus developed in the early 1990s and whether the company abused its position on a standards-setting panel to enhance the market for its patented technology.

Total costs and expenses in the first quarter jumped 12% from the previous quarter primarily because of a $1.9 million increase in litigation costs.