) posted second-quarter 2013 adjusted earnings per share of 2
cents, comprehensively beating the Zacks Consensus Estimate of a
loss of 11 cents per share. Adjusted earnings exclude other
patent royalties received, acquisition costs and retention bonus,
amortization, costs of restatement and related legal activities
but include stock-based compensation expenses.
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Rambus reported total revenue of $57.9 million in the second
quarter, up 3.0% from $56.2 million a year ago and within the
company's revenue range of $53.0 million to $58.0 million. The
year-over-year growth was mainly due to a one-time royalty and
patent license from
Royalty revenues grew 2.3% year over year to $57.0 million.
Revenues from Contracts were $0.9 million, up 84.9% from the
comparable quarter last year.
Total operating expenses in the second quarter were $52.2
million, down 32.9% from $77.9 million reported in the previous
quarter, mostly due to the one-time reversal of SK Hynix related
litigation costs accrued over a period of time and the absence of
restructuring charges. The decline in operating expenses was due
to higher cost rationalization, especially in the marketing,
general & administrative expenses and research and
Reported operating income in the quarter was $5.7 million
compared to an operating loss of $21.7 million in the year-ago
quarter. Operating margin was 9.9% compared to (38.7%) in the
Reported net loss was $6.4 million or 6 cents per share compared
to a net loss of $32.2 million or 29 cents in the comparable
quarter last year. Excluding the impact of other patent royalties
received, acquisition costs and retention bonus, amortization,
costs of restatement and related legal activities and non-cash
interest expense on convertible notes but including stock-based
compensation expenses, adjusted earnings per share came in at 2
cents versus 10 cent in the year-ago quarter.
Rambus exited the quarter with cash, cash equivalents and
marketable securities of approximately $205.6 million, down from
$214.8 million in the prior quarter. During the quarter, the
company paid the second installment of retention bonuses for the
Cryptography Research acquisition as well as their semi-annual
interest gains on their bonds, resulting in the use of cash from
operations of $10 million. Moreover, the company paid $4.3
million as interest expense related to the company's convertible
For the third quarter of 2013, the company expects customer
licensing income to be between $69.0 million and $74.0 million.
Moreover, the company expects pro forma operating expenses, which
exclude restructuring charges, retention bonuses, stock-based
compensation, amortization of intangible assets and gain from
settlements, between $49 million and $52 million. It also
includes litigation expenses of $1 million to $2 million. Pro
forma net income is expected between $9 million and $14 million.
We are encouraged by Rambus' second-quarter results as the bottom
line surpassed the Zacks Consensus Estimate. The company provided
decent guidance for the third quarter of 2013 given modest
royalty receipts. However, we see a better second half given a
ramp up in its business.
The company is going through a restructuring phase and we expect
it to yield favorable results. Previous legal challenges from
customers such as
) and STMicroelectronics appear to have been resolved: Rambus and
STMicroelectronics recently announced a settlement that settled
all outstanding claims, including pending disputes related to
Rambus' patented innovations, Garmin was listed as a downstream
customer stemming from an ITC action that has now been settled.
The company counts additional firms such as
Advanced Micro Devices
) as licensees.
We are encouraged by Rambus' decision to divest its Display
patent assets to Acacia Research Corp. and to focus wholly on the
Lighting space, given enormous growth prospects in the LED (light
emitting diode) arena.
Currently, Rambus has a Zacks Rank #1 (Strong Buy).
(We are reissuing this article to correct some inaccuracies.
The original article, issued earlier today, Friday, July 19,
2013, should no longer be relied upon.)