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Rambus Results Beat Expectations

The designer of computer memory technology posts EPS of 8 cents and sales of $32.4 million.
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Updated from Jan 15

After the close Thursday,



reported fourth-quarter earnings of $8.6 million, or 8 cents a diluted share, 3 cents better than expected and 2 cents better than the Los Altos, Calif., company earned a year earlier.

Wall Street liked the news, and Rambus stock was up $1.24, or 3.7%, to $34.74 about 15 minutes into Friday's session.

Revenue in the quarter was $32.4 million, up 26% over the same period last year and up 13% sequentially. The two analysts who follow the company had expected revenue of $29.80 million and a 5-cent profit.

The company also announced that Dave Mooring will relinquish his role as president but will remain on the board and will act as an adviser to CEO Geoff Tate on strategy. "Flattening our organization is the right thing to do," Tate said during a conference call after the earnings release.

A Rambus spokeswoman said the company has not yet decided if it will replace Mooring with a new president.

For the current, or first, quarter, the company told investors to expect revenue ranging from $32 million to $35 million. Rambus does not give EPS guidance. Thomson First Call did not indicate analysts' estimates for revenue, but the one analyst who reported an earnings estimate is expecting 6 cents in the March quarter.

For the full-year 2003, the company earned $23.2 million, or 22 cents a diluted share, compared with 24 cents in 2002. Revenue for the year totaled $118.2 million, up from $97.4 million a year earlier.

Although Rambus is a technology company, it often seems that it gets more attention for its efforts in court than for the quality of its products -- high-speed memory technology that it licenses to memory-chip makers. The firm has been embroiled for years in patent litigation alleging that it purposely deceived an industry standards-setting group in the early 1990s so that it would receive royalties from other memory manufacturers.

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Infineon Technologies


, as well as





, have refused to pay royalties to Rambus, prompting the chipmaker to pursue litigation against all three.

Earlier this month, Rambus said the U.S. District Court for the Eastern District of Virginia has

given it the green light to proceed against Infineon.

Should Rambus prove that the memory makers have violated its patents, royalties annually could amount to 2% to 3% of the entire DRAM market, said Erach Desai, who follows the company for American Technology Research. Because the DRAM market is now valued at about $18 billion, those royalties would add from $2.50 to $3 to earnings per share, he said.

Desai said he is optimistic about Rambus' chances in court. (ATR does not have an investment banking business.)