Another Rambus Run-Up
Rambus
(RMBS) - Get Rambus Inc. Report
shares rose sharply Wednesday, after a financial analyst predicted the company could garner nearly $1 billion in royalties and damages stemming from various legal battles.
"We believe 2006 could be a positive turning point in Rambus litigation efforts that could significantly change the financial structure of the company," wrote WR Hambrecht analyst Daniel Amir in a note to investors upgrading the company from a hold to a buy.
Shares of Rambus recently climbed $6, or 12%, to $34.35 in midday trading Wednesday.
The stock is up 90% since the beginning of the month, adding $1.6 billion to the company's market cap.
Los Altos, Calif.-based Rambus develops intellectual property for computer memory chips which it licenses to technology companies.
Last week, Rambus
scored a legal victory when U.S. District Court Judge Ronald Whyte ruled that the company did not unlawfully destroy evidence in a patent infringement case with South Korea's
Hynix
. That case is now slated to go to trial in March.
Rambus is involved in a spate of other litigation, including a patent infringement suit with
Micron
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, and a case alleging that several companies, including
Samsung
, Micron and Hynix, conspired to fix prices in the market for DRAM chips.
According to Amir, Rambus has a good chance of gaining at least partial victory in most, if not all, of the cases. He pegged the potential royalty and damage upside to Rambus at $936 million.
Also contributing to the bullish outlook on Rambus is the company's
recent $75 million licensing pact with
Advanced Micro Devices
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. As a result,
Intel
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could renew its own deal, which is set to expire this year, wrote Amir.
Amir raised his 2006 revenue and earnings estimates for Rambus to $180 million with 29 cents EPS.
