Rambus Inc. CEO Discusses Q2 2012 Results - Earnings Call Transcript

Rambus Inc. (RMBS)

Q2 2012 Earnings Call

July 19, 2012 05:00 p.m. ET


Ron Black – President and CEO

Satish Rishi – CFO

Thomas Lavelle – General Counsel

Sharon Holt – General Manager, Semiconductor Business Group

Martin Scott – General Manager, New Business Group


Paul Coster – JP Morgan

Matthew Galinko – Sidoti & Company

Michael Cohen – MDC Financial Research

Hamed Khorsand – BWS Financial



Good day ladies and gentlemen and welcome to the Rambus Q2 2012 conference call. At this time all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Satish Rishi. Please go ahead.

Satish Rishi

Thank you Patrick. Welcome to the Rambus second quarter 2012 conference call. I'm Satish Rishi, CFO and on the call today are Ron Black, President and CEO, Thomas Lavelle our General Counsel, Sharon Holt, General Manager of Semiconductor Business Group and Martin Scott, General Manager, New Business Group.

Before we begin, I need to inform you that 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 10812253 when you hear the prompt. In addition, we are simultaneously webcasting this call, along with the audio we'll be webcasting slides too. So even if you're joining us via conference call, you may want to access the webcast for the 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 formats in our press release and in the earnings call. I also 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 that are discussed during this call, and which may be more fully described in the documents we file 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 reconciliation on our website at www.rambus.com on the Investor Relations page.

Now I will turn the call over to Ron to review the business, Ron.

Ron Black

Thanks Satish and good afternoon to everyone. Over the last months since becoming CEO, I have had the opportunity to meet with a number of people both internally and externally and I can tell you that I'm even more excited and impressed with the technical prowess that exists here at Rambus. This is a company that is [indiscernible] (02:47) with enormous technical strength in a multitude of fields. Nevertheless, as I mentioned on the call the day I joined the company, I'm very aware that our current stock price is not reflecting the overall value the company can provide. To that end I have been reviewing all of our businesses in depth and while I'm not prepared to make any changes immediately, I will say that we will be making decisions that optimize our business.

One of the biggest issues we face as a company is that our engagement model for patent licensing has affected our image in the market and created trust problems with the customers and partners we serve. Interestingly, this is not the universal position and there are many customers and partners that have excellent relationships with Rambus. It is such positive engagements that we must and will model to continuously grow the business. Now, just to be clear, it maybe necessary for us to from time to time take actions to protect our intellectual property. That happens in every industry. However, our primary strategy is to provide outstanding products and services to customers and partners that we serve and by doing so make their products better.

Turning to the industry at large and some of the key business drivers for Rambus, we are carefully monitoring and evaluating Micron’s offer to purchase Elpida. In general, we are in favor of the combination as consolidation tends to stabilize every industry, which in turn is ultimately good for all participants, Rambus included in this case. Simply put, if our customers are making money, it is easier for us to do so as well. With respect to Rambus’ collaboration with Micron and Elpida we remain confident that the combined entity that would result from this merger will want to take a license to our portfolio, which is obviously our goal. However, as Satish will outline in our guidance for the next quarter, we are taking the Elpida payments out until the situation is resolved. We think this is the prudent thing to do given the bankruptcy proceedings and the time it takes for deals to be finalized.

Moving now to our new business group, I have spent time with both our lighting and display team as well as our cryptography research tem and I see enormous opportunities for both of these businesses. On the lighting front, the deal we signed with Cooper Lighting is important as it allows us to interact with a leading lighting company and help them bring advanced LED lighting solutions to market. And there is a lot of activity taking place with Cooper. At LightFair, Rambus provided over 40 lighting pictures based on our novel MicroLens LED technology that puts light precisely where it wanted. I know this sounds obvious, but technically it is not very easy to do with LEDs. While I wasn’t personally at LightFair, the videos I saw and the discussions I had with external folks from the industry clearly indicated how impressive the Cooper booth was. And I can tell you our team is not only proud that the booth was essentially dedicated to Rambus based products, but also excited about the F&B from the enormous number of people that lined up to see it. Our collaborative relationship with Cooper is exactly the type of customer engagement model that will exist across the board in Rambus.

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