Friday, April 21, 2006

Rambus Red Thursday

On Wednesday Rambus Inc. hosted its Q1 '06 conference call. It was disappointing. It should not have been, but is was. The market responded accordingly.

Rambus CEO, Howard Hughes reviewed the Advanced Micro Devices Inc. and Fujitsu licensing agreements that were signed in Q1 '06. Hughes stated that the TAM (total annual market) for semiconductors products which use Rambus technology in memory controllers and highspeed logic interfaces is in excess of $100 billion. Hughes stated that Rambus has many companies left to sign, but did not indicate what percentage of the relevant TAM is now signed. Certainly Rambus knows, but in typical fashion, Rambus keeps its cards covered. On a day when Ramboids needed new good news, Rambus missed an opportunity.

One intriguing hint of the future that Rambus offered its shareholders was a reference by Hughes to the TAM for electronic products using Rambus technology totaling more than $1.5 trillion. Nice. More details, please.

Unfortunately, Hughes offered not even a hint that Rambus has license agreements on the shelf waiting to take effect in the event that Rambus receives a favorable verdict in the Hynix case.

New Senior VP and CFO, Satish Rishi, reviewed the numbers. It is a tough job when the free cash flow is pouring in from officers and directors exercising stock options and the net income is swamped in the same wave.

Rambus Senior VP and General Counsel John Danforth, usually a strong performer and bright light at conference calls, admitted that he would be skipping the first five pages of his notes as the Hynix jury had not yet returned a verdict. Danforth summarized the status of the various cases and yet again invigorated the battle weary Ramboids.

Later in the day, an attack on the stock rocked the Ramboids when the share price dropped below $30.00. Ouch and ouch again. Hopefully, CFO Rishi took advantage of the "buying opportunity" and repurchased some shares and reduced the float.

Daily Stock Quote Notification

Rambus Inc. (RMBS - NASD)
Closing Price $ 38.50
Opening Price $ 45.11
Previous Close $ 46.60

Change -8.10

Last Trade Apr 20 4:17PM
Volume 24,845,000
Day Low $ 29.52
Day High $ 46.14

Now, the week has ended. No jury verdict. Many Rambus shareholders were slapped silly in the whipsaw of Rambus Red Thursday. April options expired. Rambus, likely sitting on lots of good news that could have helped the long-suffering Ramboids remained silent.

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