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Rambus Update
Jul. 15th, 2008 02:23 pmIn this post I recounted attending the Hynix v. Rambus permanent injunction hearing.
The judge then appeared to be leaning toward issuing a complex order including a permanent injunction (PI) on everything beyond DDR2 and a forced license with high royalties (4%? 7.5%?) for SDRAM and DDR, with his main uncertainty centering around which category to put DDR2 in, all of this affected by the post-EBay climate for patent enforcement orders.
Since then, the market turmoil has taken most every small-cap stock down with it, and I've liquidated a chunk of my muni bond position and bought a lot of cheap stuff - BCSI, SIRF, SPSN, RTU. Gloom and fear are your friends if you are careful to buy quality companies that aren't really much effected by the crisis du jour. RMBS at $16 falls into that category -- back damages from the industry will be in the $Billions, with the half of the DRAM industry that didn't license paying up for years of infringement, and makers of memory controllers on the hook also, everyone from Nvidia on down to Cisco, Broadcom, and Sun using Rambus IP in their products. So there's about $10 a share in damages, something like $5 a share in ongoing royalties which will continue to increase, and an unknown payoff from the antitrust suit Rambus has filed against the DRAM makers for conspiring to drive them from the marketplace (which will probably be bargained away for better future royalties.) The legal process is 90% over and real revenues should start coming in in the 1-2 year timeframe, so there's not much downside and a lot of upside from here.
Some recent news stories:
Hynix Might Pay $51 Million to Rambus for U.S. Access
Rambus and Qimonda Sign Amended Patent License Agreement
Rambus files patent-infringement suit against Nvidia
The judge then appeared to be leaning toward issuing a complex order including a permanent injunction (PI) on everything beyond DDR2 and a forced license with high royalties (4%? 7.5%?) for SDRAM and DDR, with his main uncertainty centering around which category to put DDR2 in, all of this affected by the post-EBay climate for patent enforcement orders.
Since then, the market turmoil has taken most every small-cap stock down with it, and I've liquidated a chunk of my muni bond position and bought a lot of cheap stuff - BCSI, SIRF, SPSN, RTU. Gloom and fear are your friends if you are careful to buy quality companies that aren't really much effected by the crisis du jour. RMBS at $16 falls into that category -- back damages from the industry will be in the $Billions, with the half of the DRAM industry that didn't license paying up for years of infringement, and makers of memory controllers on the hook also, everyone from Nvidia on down to Cisco, Broadcom, and Sun using Rambus IP in their products. So there's about $10 a share in damages, something like $5 a share in ongoing royalties which will continue to increase, and an unknown payoff from the antitrust suit Rambus has filed against the DRAM makers for conspiring to drive them from the marketplace (which will probably be bargained away for better future royalties.) The legal process is 90% over and real revenues should start coming in in the 1-2 year timeframe, so there's not much downside and a lot of upside from here.
Some recent news stories:
Hynix Might Pay $51 Million to Rambus for U.S. Access
Rambus and Qimonda Sign Amended Patent License Agreement
Rambus files patent-infringement suit against Nvidia
