Rambus Conf. Call notes
thanks to: Watzman on Yahoo
Starting ....
Eulau (CFO) speaking. Usual disclosures & CYA BS. Moring and Danforth (legal) present & to speak later. Tate not present.
Redwood & Yellowstone are significant revenue contributors for 1st time. Major "investments" in litigation & R&D.
[I won't repeat the #'s in the release]
RDRAM royalties down 1%, SDRAM & DDR up 4%. SDRAM & DDR is about 35% of revenue.
Spending up 25% in the qtr & 59% from year ago. Increase is in litigation, up 2.6 million at 7.1 million, due to FTC case. Costs are higher than expected. Operating expenses up 15%, due to ramp of Yellowstone & Redwood.
Strong cash flow, have $183 million in cash, but spent $15 million repurchasing shares.
Guidance for next quarter (lots of uncertainty). Revenue 27 to 29 million. Op exp. $16-18 million (excl. litigation). Litigation spending very hard to predict. Est. $5 to $8 million for quarter. Depends a lot on FTC trial & schedules for trials.
They are channging their Fiscal year to Calendar year (Yea !!!) :-) [I've wanted this for several years].
Litigation:
CAFC decision & denial of En Banc
IFX HAS sought a stay pending US Supreme Court appeal, expected by October. It appears he's saying that retial will wait for decision from USSC.
One of the agreements has reverted back to royalty, one remains fixed for now. (I hope I got that right, someone needs to confirm that).
FTC has DENIED motion for summary judgement.
He's covering shareholder lawsuits, nothing unexpected.
Europe, waiting for court to schedule, expected in fall. Believes court will move forward against IFX & MU.
Submitted arguments to EPO regarding appeal of claims language. Hearing in March on "utility model", they followed the EPO, Rambus rejected this, and the Utility model was revoked. This will be appealed, but does not have any real significance (model has already expired anyway).
Dave Moring:
[I just lost the connection]
[it's back, but a piece is missing]
Redwood, up to 6.4 GHz, it's parallel bus. Can go down to 400 Mhz. Optimized for low cost & low latency.
Yellowstone, 3.2 GHz to 6.4 GHz up to 100 GByte/sec, about 25x today's rates. Has octal data rate (8 bits per clock). This is a DRAM interface. More details in July at RDF in Japan.
RaSer 1-10 Gb/sec. Signed several licenses, now 18 in total, incl. one with PLX for PCI Express.
RDRAM is winning new designs in a variety of devices. Intel, 850e is last RDRAM chipset on Intel's roadmap. SiS, 658 is shipping, ABit motherboard. But more interested in R659, planned to sample in 3rd quarter. 4 channels of 1200 MHz RDRAM, 9.6 GB/sec, 50% higher than any other solution. HP is shipping Alpha server with ten RDRAM channels.
Steve Tobak (Marketing) has left the company.
(Hmmmmm)
Reviewing the new member of the board of directors.
Q. How long will FTC trial take?
Danforth: Starts April 30th, CC says 4-5 weeks to present their case, a bit less for Rambus, but easily into July, possibly August.
Q. R&D expense increase, is it primarily for Toshiba/Sony, or overall technology? Both
Q. What is understanding with company that is still paying fixed royalties.
As stated, two firms had temporary fixed payment agreements. The smaller of the two has reverted to original agreement. The terms for the 2nd company are not specific but are not met (???).
Q. Can Rambus bring DOJ grand jury discovery into their cases. DOJ limited some questioning. Danforth does not expect DOJ to end in time for any of that evidence to be used.
Q. If I remove both extraordinary income & expense I get 6 cents / share, is that correct? [Eulau going thru the numbers]. [he's asking for detail that Eulau isn't prepared to give]
Q. Share repurchase of 1.4 million shares, how accounted for. Ans: reduces cash & goes into equity & reduce overall shares outstanding. Have right to purchase up to 4.7 million additional shares.
Q. CAFC ruling is final ruling of the CAFC, with motions for rehearing denied. IFX is seeking US Supreme Court appeal. This is expected to be determined (whether they will hear it or not) by October. If the CAFC decision holds, parts of it are unique to IFX, parts will apply to other cases.
(summary)
There were some major items:
1. FTC has denied Rambus motion for summary judgement (apparently on DDR as well as SDRAM)
2. IFX is filing a US Supreme Court appeal. The decision as to whether the Supreme Court will hear this is due by October. It appears to me (someone correct me if I'm wrong) that, as I originally thought, but that others said I was wrong, that the retrial of the VA trial -- and, by inference, the MU and Hynix trials -- does NOT go forward until this is resolved. In other words, everything is on hold until October (as I had thought but which others said I was wrong about).
3. Of the two firms with "fixed price" agreements instead of royalty agreements, the smaller firm has reverted to royalties, the larger firm (believed to be Samsung) has not.
Those were all fairly major items.
It seems to me that we are now "in limbo" once again, awaiting major decisions that will come out between July and October, e.g. the FTC decision and the IFX US Supreme Court appeal. If the US Supreme Court agrees to hear the case, of course, then that branch of this whole matter will extend by another 1-2 years.
However, it's also still possible that both of these two pieces could be "wrapped up" by October. Unfortunately, that puts any new infringement trial back to, probably, late 1Q or possibly 2Q of next year.
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