Rambus posts sharply higher profits
Reuters Story - July 14, 1998 22:34
By Susan Moran
PALO ALTO, Calif., July 14 (Reuters) - Rambus Inc.
, a developer of technology that makes computer memory
chips run faster, said on Tuesday that its profits more than
tripled in the latest quarter.
The Mountain View, Calif.-based company said it earned
$1.69 million, or 7 cents a share on a diluted basis, in its
fiscal third quarter ended June 30, up from $527,000, or 2
cents a share, a year ago and even with Wall Street
expectations.
Revenues jumped 35 percent to $9.2 million from $6.8
million in the year-ago quarter, but were down 5 percent from
$9.7 million for the March quarter.
The company attributed the dip in sequential revenues in
part to an anticipated seasonal decline in shipments of Rambus
integrated circuits used in Nintendo Co. Ltd.'s
Nintendo 64 video games, which account for the majority of
Rambus' royalty revenues.
Gary Harmon, Rambus' chief financial officer, said he
expected royalty revenues to recover in the coming quarters as
demand for Nintendo 64 picks up.
Harmon also blamed the weaker sequential company-wide
revenues on steep drops in DRAM (dynamic random-access memory)
chip prices in recent months. In fact, those prices have
dropped by as much as 70 percent over the past year, according
to some analysts' estimates.
The company's contract revenues, which made up the bulk of
company-wide revenues, hit a high-water mark in the June
quarter as Rambus has now already signed up most of the large
semiconductor companies, Harmon said in an interview.
The largest and most visible licensee of its technology is
Intel Corp. , whose endorsement of Rambus in November
1996 gave the company a huge stamp of approval and helped
catapult Rambus' stock when it went public in May 1997.
Rambus went public at $12, closed its first day of trading
at $23.75 and reached a peak last August at $86.50. But it sank
to a 52-week low of $35.50 last month amid concerns about
Nintendo, DRAM pricing pressure and economic doldrums in Asia,
among other things. On Tuesday it fell $2 to $58.75 on Nasdaq
ahead of the earnings announcement.
Rambus does not actually manufacture any of its chips.
Rather, following the classic software model, it licenses its
interface technology to memory and logic semiconductor makers.
Among those licensees are Silicon Graphics Inc. ,
Cirrus Logic Inc. , Hitachi Ltd. and
International Business Machines Corp. , NEC Corp.
and Texas Instruments.
Geoff Tate, Rambus chief executive officer, told analysts
in a conference call the company expects revenues from
royalties to pick up significantly once Intel chip sets based
on the Direct Rambus technology go into volume production next
year.
"The key thing for Rambus is the timing of Intel's
ramp-up," said a Wall Street analyst who declined to be
identified. "Rambus still looks very positive to us." |
