Rambus' CEO Presents At 2012 Citi Technology Conference (Transcript)

Rambus Inc. (RMBS)

2012 Citi Technology Conference Transcript

September 4, 2012 3:45 PM ET

Executives

Ron Black - Chief Executive Officer

Satish Rishi - Chief Financial Officer

Analysts

Presentation

Unidentified Analyst

I’m part of Citi’s Semiconductor’s team. Today we have from Rambus, Ron Black, CEO; and Satish Rishi, CFO, will be doing a presentation for us today.

Ron Black

This is good. You can hear? Thank you for coming and there is no cross phones, I guess so, at least you’re listening to me. We can skip the, oh, it’s a little hard to see off the top of it. But these are the topics. I wanted to cover just a few things.

First the company, there is another organization that we put in place. I joined the company about two months ago and I’ve gone through the normal. Let’s do a deep dive on all of the businesses and make the requisite changes. But we also announced a restructuring which is really an eye towards reducing some of the G&A expenses and I’ll give you some background behind that.

And then, a little bit more about the strategy, which is largely the same as the company was embarking on before, but I have a bit of a spin on it as it’s contained within these slides and I think, it will be interesting.

I’ll touch on some of the differentiators in the three key businesses we have and then we’ll, couple on the financials, which I’ll breeze by because the historical and there is no new news but to make a few points.

So, in terms of the company, I’m always reluctant an investor presentations to show organization charts because they mean a lot to the company inside but often they mean very little to the outside. But I thought I’d make a few points which is at the top level.

The company before was really focused on what we’re calling new businesses and the historical semiconductor business or semiconductor business group, and after Satish and the team and I did a deep dive, we concluded that it would be better to really elevate the key businesses that we’re really at a business unit status and then to take some of the other more strategic initiatives and put them into a corporate R&D or lab function if you will and then to update the organization in this way.

It eliminated a layer of management and made, I think, our decision making much more robust and efficient in the process. If there is a word, I would say it or little bit more entrepreneur experience despite the fact that there was a lot tracking of big company historically.

With that change in the organizational construct, we also concluded that the company had really gotten out in front of itself a bit mostly on the G&A spending and so that’s a bit of benchmarking. We reduced largely the G&A to produce an annualized net saving based on second quarter.

So what we currently have on record as our expenses, between $30 million and $35 million, and we use the word net year simply because we actually are taking out more on the G&A front, but there is some of the core businesses, some of the new acquired business that I’ll talk about that we’re spending a bit more money on.

We’re reviewing other assets, I should say, specifically, Satish is the CFO, the business and other contractual obligations. So we may adjust and take more charges by the end of the year.

I think from an investor standpoint this was something that, some investors have told me they were looking for and important to lower cash burn, get to a point that on kind of steady state basis we should get to cash flow positive.

So in terms of the strategy, this is a new chart describing a strategy that really the company is being doing for long time. So I’m going spend a minute on this chart. It’s not meant to be complex but it is complete and I think important.

The company has a long history of partnering with companies but also ending up in litigating with them based on the technologies that we’ve develop over many years. Most of these technologies historically have been in the area of memory and links if I just go back to this organization chart.

The memory and links piece of it was really the historical Rambus piece that if you follow the company for any period of time, over the last 20 years this produced almost all of the revenue and even today produces much of it. So pieces culminate on some of the calls that the new businesses will represent about 15% by the end of the year.

These new businesses are in Cryptography, so CRI, Cryptography Research Incorporated and LDT is in Lighting Display Technology, which is really around LED, not LED chips or components themselves, but in light guides and optical guides that produced and change where the photons are, I’ll talk about that in some point.

What is very different is if you look at the value change in these businesses and you start in the bottom on the left hand side of this chart and you think about IP, so the creation of IP, all our businesses do that.

And in fact the core of what our legacy was, the bit memory and links business that was around the patents itself and there was some licensing of technology and the technology were often in the force of pieces of semiconductor componentry typical referred to as a cores. So IL core and the design know how to make very high speed devices.

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