Rambus' shares off as earnings fall
By Rex Crum, CBS.MarketWatch.com
Last Update: 10:09 AM ET April 15, 2003
LOS ALTOS, Calif. (CBS.MW) - Rambus shares fell as much as 7 percent Tuesday after the memory chip design company reported a drop in profit that was attributed to an increase in litigation costs.
Rambus (RMBS: news, chart, profile) shares were down $1 at $14.75 on moderate volume after reporting Monday a second-quarter net profit of $5.1 million. Chief Financial Officer Robert Eulau said legal costs associated with several patent-litigation cases caused Rambus' earnings to drop by more than $1 million from last-year's second quarter net income of $6.7 million
On a per-share basis, Rambus met the consensus of Wall Street analysts with a profit of 5 cents a share.
Despite the profit drop, Rambus officials said second-quarter sales rose to $28.1 million from $23.5 million, and topped the estimates of analysts surveyed by Thomson First Call, who were looking for the company's revenue to come in at $27.5 million.
Chief Executive Officer Geoff Tate credited the sales increase to new contracts from Sony (SNE: news, chart, profile) and Toshiba, and to more deals for Rambus' Yellowstone and Redwood chip-interface products. Rambus products are used in personal computers and Sony's PlayStation 2 video-game controllers, among other devices.
Rambus said contracts for its Yellowstone and Redwood technologies contributed to its reporting $3.3 million in contract revenue, up 90 percent over last year. The company also reported $24.8 million in royalty revenue, a 14 percent increase over last year's second quarter.
Among the companies that have engaged in patent-infringement suits against Rambus are Germany's Infineon Technologies (IFX: news, chart, profile), Boise, Idaho-based Micron Technology (MU: news, chart, profile), and Hynix Semiconductor, of Korea. The companies claim Rambus used fraudulent methods to obtain patented ideas that came about during an industry standards-setting process.
In early April, a U.S. appeals court gave a favorable ruling to Rambus in its case involving Infineon, sending the case back to a lower court, which will reconsider Rambus' patent infringement allegations against Infineon.
Eulau added that a U.S. Federal Trade Commission case against Rambus is expected to being April 30.
For the next quarter, Eulau said Rambus expects its third-quarter revenue to be between $27 million and $29 million. Industry analysts are estimating Rambus' third-quarter sales to be $27.8 million with a profit of 5 cents a share.
Rex Crum is a reporter for CBS.MarketWatch.com in San Francisco. |
