Rambus Inc.
(
RMBS
) recently signed a patent licensing agreement with
Broadcom Corp.
(
BRCM
) for an undisclosed sum. Per the terms of the agreement, Broadcom
can use Rambus' patented DRAM memory controllers and serial links
technology for its logic integrated circuit products for five
years.
Rambus will receive royalty payments based on the shipment of
these devices during the contract period. Apart from this deal,
Rambus and Broadcom have settled all earlier claims regarding its
patented innovations.
Broadcom is a fabless semiconductor company and its operations
circle around the broadband, mobile and wireless, as well as
infrastructure and networking verticals. As per a report published
by the U.S. research firm Gartner in April 2011, Broadcom is now
one of the top 10 semiconductor companies in the world.
We believe that association with Broadcom will support Rambus'
fundamentals for the upcoming quarters. And, success in Broadcom's
arena could fetch similar deals from the semiconductor
industry.
In June, Rambus licensed its patented technologies to Freescale
Semiconductor Inc. for five years.
In March, Toshiba Corp. renewed its patent licensing agreement
with Rambus for another five years. Toshiba was Rambus' first
licensee and has helped the company to gain a strong foothold in
Japan.
Though continuous licensing deal wins for Rambus is not new,
anti-trust or patent infringement battles continue to make life
difficult. Rambus faced a series of lawsuits from tech biggies,
Nvidia Corp.
(
NVDA
),
Hewlett-Packard Co.
(
HPQ
), Asus Computer International Inc., Samsung, Hynix Semiconductors
Inc. and
Micron Technology Inc.
(
MU
) to name a few.
Rambus has won a favorable ruling from the U.S. International
Trade Commission for lawsuits against Nvidia, H-P, Asus and
Samsung. But it received an untoward ruling by a California jury on
the long-drawn antitrust battle with Micron and Hynix in November
that was surprising. The company's shares lost significant value on
the news of losing the case as the negative outcome blew investor
sentiment.
Despite the current volatility in the share price, we consider
that Rambus' growth story remains intact. Rambus reported an
interesting third quarter, easily surpassing the Zacks Consensus
Estimate. The company also provided a positive guidance, although
seemingly weak (because of seasonality).
Rambus holds a Zacks Rank #3, implying a short-term Hold
recommendation.
BROADCOM CORP-A (
BRCM
): Free Stock Analysis Report
HEWLETT PACKARD (
HPQ
): Free Stock Analysis Report
MICRON TECH (
MU
): Free Stock Analysis Report
NVIDIA CORP (
NVDA
): Free Stock Analysis Report
RAMBUS INC (
RMBS
): Free Stock Analysis Report
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