Rambus Inc.
(
RMBS
) posted second quarter 2012 adjusted loss per share of 7 cents,
much better than the Zacks Consensus Estimate of 20 cents loss per
share. Adjusted loss per share 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 plunged 9.68% in the
after hours.
Revenue
Rambus reported total revenue of $56.2 million in the second
quarter, down 15.1% from $66.2 million a year ago. The quarter's
revenue was within the company's guided range of $53.0-$59.0
million but below the Zacks Consensus Estimate of $57.0 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.
Royalty revenue fell 8.6% year over year to $55.7 million. Revenue
from Contracts was $0.5 million, substantially down (90.6%) from
the comparable quarter last year.
Operating Results
Total operating expenses in the second quarter were $78.0 million,
up 13.4% from $68.7 million in the year-earlier quarter. The steep
rise in research and development expenses (58.3%) led to higher
operating expenses.
Reported operating loss in the quarter was $21.7 million, compared
to $2.5 million in year-ago quarter. The operating margin was
(38.7%) compared to (3.8%) in the year-ago quarter.
Reported net loss was $32.2 million or 29 cents per share, compared
to $10.6 million or 10 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 loss per share came in at 7 cents
versus 1 cent in the year-ago quarter.
Balance Sheet
Rambus exited the quarter with cash, cash equivalents and
marketable securities of approximately $203.2 million, compared to
$232.5 million in the prior quarter. The company used $16.7 million
to pay retention bonuses related to the acquisition of Cryptography
Research Inc. (May 2012) and $4.3 million to pay the interest
expense related to the company's convertible notes.
Guidance
For the third quarter of 2012, Rambus expects revenues between
$54.0 million and $60.0 million. Pro forma operating expenses are
expected in the range of $58.0 million to $63.0 million, including
litigation expenses of $4.0 million to $7.0 million. Pro forma net
loss is projected between $7.0 million and $1.0 million.
The Zacks Consensus Estimates for the third quarter and 2012 are
pegged at 16 cents and 75 cents loss per share, respectively.
Our Take
Though Rambus reported a disappointing second quarter, the bottom
line was better than the Zacks Consensus Estimate. Though revenue
grew marginally year over year, it fell significantly when compared
sequentially. Third quarter guidance reflects weak sequential
growth, which according to management is due to lower contract
price and royalty income.
One of Rambus' key customers,
Micron Technology Inc.
(
MU
) is taking over the bankrupt Japanese chip-maker Elpida, a 10.0%+
customer of the company. The market consolidation will likely
reduce the amount of royalty income.
But Rambus' endeavor to diversify into the lighting and display
technology space in an effort to tap the tremendous opportunity in
solid state lighting is encouraging. During the conference call,
management seemed quite positive on the growth prospect of its
lighting and display biz. Rambus has recently licensed its patented
lighting technology to Cooper Lighting, a leading lighting company.
Rambus will help Cooper bring advanced LED lighting solutions to
market.
With the growing popularity of energy-efficient lighting, the
in-vogue LED products are finding place in the latest
architectural, retail, commercial and residential lighting
fixtures. We find Rambus in a favorable position for a share of
this opportunity.
Currently, Rambus has a Zacks #2 Rank, indicating a short-term
"Buy" rating.
MICRON TECH (MU): Free Stock Analysis Report
RAMBUS INC (RMBS): Free Stock Analysis Report
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