RMBS from 4/12:Rambus Shows Loss After Charge, Operating Profit Up
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NEW YORK (Reuters) - Rambus Inc. (NasdaqNM:RMBS - news), which makes technology to speed up computer system performance, on Wednesday said its second-quarter operating profits per share nearly doubled as revenues surged, but the company showed a net loss after taking a huge compensation charge.
Operating income climbed to $4.9 million, or 15 cents per share, in the second quarter ended March 31, from $1.6 million, or 8 cents, in the same period a year earlier. Revenues rose nearly 60 percent to $15.7 million from $9.9 million.
But the Mountain View, Calif.-based company also took a $171.1 million non-cash charge for employee compensation and another $230,000 charge related to acquisition costs.
After factoring in those items, the company posted a net loss of $166.4 million, or $6.98 per share, in the second quarter ended March 31, versus a profit of $2 million, or 8 cents, in the year-ago quarter.
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The announcement came after the end of regular U.S. stock trading. Rambus shares fell in after-hours trade on Instinet to 193, down from their Nasdaq close at 213 13/16, a drop of 32 3/16. That placed it among the top loss leaders on a day when the Nasdaq composite index swooned 7.06 percent.
``There was that enormous charge which was not expected,'' said SG Cowen analyst Drew Peck. ``This stock is highly volatile, and the volatility has nothing to do with the earnings picture.''
The $171 million one-time charge was related to the vesting of certain employee options and common stock equivalents. It was a non-cash charge, except for a $1.2 million payment for payroll taxes. The vesting was triggered as the company's stock traded at more than 200 for 30 consecutive days, a mark crossed near the end of the quarter, Rambus said in a statement.
The Wall Street consensus estimate for earnings excluding the one-time items was 14 cents per share, according to research firm First Call/Thomson Financial. The per-share operating result was a penny more than forecast.
Rambus develops technology that speeds up computer memory chips so they can keep pace with microprocessors that have increased 10 times in speed over the past fives years. Rambus licenses its designs to most of the world's largest memory chip companies, which in turn pay royalties.
The much-anticipated decision last autumn by Intel Corp. (NasdaqNM:INTC - news), the leading chip maker, to include Rambus technology in its chipsets helped fuel a surge in sales for the Mountain View, Calif.-based company.
``These results were basically right in line with what we were looking for,'' said Warburg Dillon Read analyst Seth Dickson. ``One thing that stood out is that they had strong revenue from royalties, which were from seasonally strong sales during the December quarter.''
The company's share price has ranged from a year high of 471 to a year low of 51 1/2.
The stock has dropped sharply in recent weeks as some industry observers raised questions about the effectiveness of its technology. The sweeping decline by technology stocks, which appeared to intensify on Wednesday, also has taken its toll on Rambus.
The company said that the exercise of the options and stock equivalents by employees would bring positive cash flow and increase its diluted weighted average shares outstanding by about 2 percent. |
