Rambus Stock Takes Off on News of Licensing Accord With Toshiba
Shares of Rambus Inc. surged 47% Friday after Toshiba Corp., Japan’s second-biggest computer-chip maker, said it will pay Rambus royalties for a broader range of computer-memory designs.
Mountain View, Calif.-based Rambus (ticker symbol: RMBS) rocketed $26.69 to $83.38 in trading of 64.1 million shares, making it the most active U.S. stock.
Before Friday’s jump, the stock’s biggest percentage gain ever, Rambus had tumbled 52% since March 14 with the tech-sector slide.
The company’s computer-memory technology helps speed personal computers and other devices by taking full advantage of faster processors from chip makers like Intel Corp.
Toshiba’s agreement to license more of Rambus’ designs could boost sales 10% to 15% over the next year or so, and other memory-chip makers may follow, an analyst said.
“This is extremely important and a key milestone,” said UBS Warburg analyst Seth Dickson, who rates Rambus a “strong buy.”
Rambus had revenue of $43.4 million in fiscal 1999. If other memory makers sign similar licensing accords, Dickson said, the company’s revenue could increase by at least $200 million to $250 million a year over the next year or two.
Rambus is expected to earn about 60 cents a share this year and $1.50 next year.
The move by Toshiba, the world’s No. 5 memory-chip maker, is an important win for Rambus. Some manufacturers have balked at making Rambus-based products, saying they’re difficult and expensive to make. Other memory makers have been pushing alternative products to keep from having to pay royalties.
Rambus, though, says it has a broad range of patents that also cover those types of memory, and the Toshiba agreement could force other memory makers to pay Rambus for designs not based directly on the company’s technology, analysts said.
Earlier this year, Rambus sued Hitachi Ltd., Japan’s largest electronics maker, for violating the same patents that Toshiba has now agreed to recognize. While the suit against Hitachi is still pending, Toshiba has avoided a possible fight by agreeing to license the designs from Rambus.
“This certainly makes it tougher for the industry to fight Rambus,” said Drew Peck, an SG Cowen Securities Corp. analyst.
Intel, the world’s largest computer-chip maker, has been pushing adoption of the Rambus technology because it speeds up applications on computers that run on Intel’s faster chips. Intel has run into trouble, though, because using Rambus’ design is significantly more expensive than alternatives--a big problem in the price-sensitive PC market.
Intel has taken steps to quicken the adoption of Rambus technology, including a $500-million investment in Micron Technology. Micron agreed to make Rambus-based products as part of that investment.
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Rambus Revives
Shares of Rambus (ticker symbol: RMBS) soared Friday after Japan’s Toshiba said it had expanded its licensing of Rambus’ computer-chip technology. Weekly closes on Nasdaq:
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Friday: $83.38, up $26.69
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Source: Bloomberg News
