Rambus Met 1st-Quarter Estimates, But Sees Flat Earnings Ahead
Dow Jones Online News, Friday, January 15, 1999 at 11:14
NEW YORK -(Dow Jones)- Rambus Inc. met earnings expectations for the
fiscal first quarter ended Dec. 31, but the chip technology developer's
shares slid Friday after the company late Thursday warned investors that
earnings over the next two or three quarters would be flat compared with
the first quarter.
Friday morning, Rambus shares (RMBS) were down $8, or 8.1%, at $90 on
volume of 3.4 million shares, compared with the daily average of around
780,000.
After U.S. markets closed Thursday, the company posted net income of
$2.1 million, or eight cents a diluted share, compared with $1.6
million, or six cents a share, a year ago. Revenue rose 13% to $10.6
million. The mean estimate of analysts surveyed by First Call was for
earnings of eight cents a share.
But Gary Harmon, chief financial officer, said the company believes
royalties will be down as a result of a seasonal decline in sales of
Nintendo 64 video games and a discontinuation of development by two of
the company's licensees, Cirrus Logic Inc. and Chromatic Research Inc.,
which have both de-emphasized Rambus-related product lines.
Analysts are expecting Rambus to report earnings of nine cents a
share for the second quarter, 10 cents a share for the third quarter, 13
cents a share for the fourth quarter and 40 cents for 1999.
Rambus's technology, designed to enhance the performance of memory
chips, is supported by semiconductor giant Intel Corp. If the
architecture is adopted as the industry standard, all major producers of
DRAM, or dynamic random access memory, chips would have to use the
design and pay Rambus royalties.
Rambus's technology allows data to be transferred between chips at
very high speeds and was used in the popular Nintendo 64 game machine.
The company doesn't manufacture or market chips, but licenses its
technology to major chip makers. Intel would incorporate Rambus-based
DRAM into its chip sets, which run a large percentage of PCs.
Other companies have been pushing different technologies to speed
communications between chips. But rival camps can't agree on a common
competing format. Dell Computer Corp. and Compaq Computer Corp.
confirmed plans to ship PCs with Rambus technology in 1999.
Copyright (c) 1999 Dow Jones & Company, Inc.
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