) posted third quarter 2012 adjusted earnings per share (EPS) of
4 cents, compared to the Zacks Consensus Estimate of 23 cents
loss per share. Adjusted EPS excludes other patent royalties
received, acquisition costs and retention bonus, amortization,
costs of restatement and related legal activities, as well as
non-cash interest expense on convertible notes but includes
stock-based compensation expenses. Shares surged 2.43% in the
after hours reflecting positive guidance for the fourth quarter.
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Rambus reported total revenue of $57.5 million in the third
quarter, down 42.6% from $100.3 million a year ago but up 2.0%
sequentially. The quarter's revenue was within the company's
guided range of $54.0-$60.0 million and above the Zacks Consensus
Estimate of $56.0 million. The year-over-year decline was mainly
due to a decrease in contract revenue, lower royalties reported
by certain licensees and cessation of a patent license agreement.
However, the sequential growth was aided by a new licensing
agreement with Fujitsu Semiconductor Ltd.
Royalty revenue fell 40.4% year over year to $57.4 million.
Revenue from Contracts was $0.2 million, substantially down
(95.8%) from the comparable quarter last year.
Total operating expenses in the third quarter were $104.6
million, up 16.9% from $89.5 million in the year-earlier quarter.
The surge in operating expenses was due to higher one-time
expenses, partially offset by decline in research &
development and marketing, general & administrative expenses.
The company recorded a non-cash charge for the impairment of
goodwill and long-lived assets within its Lighting and Display
Technology division of approximately $35.5 million.
Reported operating loss in the quarter was $47.1 million,
compared to operating income of $10.7 million in the year-ago
quarter. Operating margin was (81.9%) compared to 10.7% in the
Reported net loss was $58.1 million or 52 cents per share,
compared to net income of $0.5 million or 0 cent 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 EPS came in at 3
cents versus 6 cents in the year-ago quarter.
Rambus exited the quarter with cash, cash equivalents and
marketable securities of approximately $207.1 million, up from
$203.2 million in the prior quarter, reflecting positive cash
flows from operating activities.
For the fourth quarter of 2012, Rambus expects revenues between
$57.0 million and $63.0 million. Pro forma operating expenses are
expected in the range of $52.0 million to $57.0 million,
including litigation expenses of $5.0 million. Pro forma net
income is projected between $2.0 million and $9.0 million.
The Zacks Consensus Estimates for the fourth quarter and 2012 are
pegged at 17 cents and 93 cents loss per share, respectively.
We are encouraged by Rambus' third quarter results as both top
and bottom lines surpassed the Zacks Consensus Estimates. But the
results were disappointing when compared with the year-ago
quarter. But fourth quarter guidance reflected decent sequential
growth, which according to management will be aided by the
Rambus planned for massive restructuring in August to bring down
costs and generate positive cash flows. We look forward to the
success of this restructuring, but note the continued loss of
legal suits to its top customers such as
) and sluggish demand from the semiconductor companies, which
keep us concerned.
However, we still believe that there are growth prospects for
Rambus given a slight recovery expected in the remainder of 2012
and beyond. We also notice that Rambus is doing well in the
Lighting and Display category. In fact, the company mentioned
enormous growth prospects in the LED arena. Rambus is also
changing its business strategy within this division to focus less
on display technology and more on general lightening to
capitalize on the imminent opportunity in LED.
Currently, Rambus has a Zacks #2 Rank, indicating a short-term