Updated from 5:05 p.m. EST

Investors sold off shares of Rambus ( RMBS) in after-hours trading Tuesday after the company reported disappointing earnings.

The report sent shares of Rambus down $1.16, or 5.4%, to $20.15 in recent after-hours trade.

The chipmaker earned $6.5 million, or 6 cents a share, on $38.61 million in sales in its fourth quarter. That bottom-line result was down both from the third quarter and from the year-ago period. Rambus earned $10.4 million, or 10 cents a share, in the third quarter on $38.76 million in sales; it earned $8.62 million, or 8 cents a share, on $32.37 million in sales in the fourth quarter last year.

The company's bottom line also fell shy of Street estimates. Analysts polled by Thomson First Call were expecting Rambus to earn 8 cents a share on $38.63 million in sales.

Rambus blamed the drop in income largely on a $5.2 million increase in litigation costs over the fourth quarter last year. The company is involved in a long-running patent dispute with rival chipmaker Infineon Technologies ( IFX).

The company also said that its provision for income taxes rose $2.6 million over that in its third quarter. It attributed the rise to increased credits on foreign taxes in its third quarter.

In a statement, Rambus CEO Harold Hughes touted the company's full-year results and pointed to the company's year-over-year improvement in revenue in the fourth quarter.

"Our quarterly revenue growth of 19% demonstrates continued momentum," Hughes said.

But investors seemed to focus on the company's deteriorating bottom line. Rambus' stock closed regular trading up 17 cents, or 0.8%, to $21.31.

Rambus did not immediately provide a forecast for its first quarter. Analysts are looking for the company to earn 8 cents a share on $40 million in sales.

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