Rambus Earnings Fall 24% on Legal Costs

Rambus Inc., a designer of high-speed memory chips used by such giants as Samsung Electronics Co. and Sony Corp., said Tuesday that its fourth-quarter profit fell 24% as legal costs more than tripled.

Net income was $6.54 million, or 6 cents a share, compared with $8.62 million, or 8 cents, a year earlier, the Los Altos, Calif.-based company said. Sales rose 19% to $38.6 million.

Legal expenses rose to $7.5 million as the company prepared for trials in patent infringement lawsuits against Infineon Technologies and Hynix Semiconductor Inc. Rambus holds about 300 patents for semiconductors used in video game consoles such as Sony’s PlayStation and in computers. The company claims that it is owed as much as $3 billion in royalties.

Rambus shares fell $1.21 to $20.20 in extended trading. They had risen 17 cents to $21.31 in Nasdaq trading.

The company was expected to earn 8 cents a share and have sales of $38.6 million, according to the average of three analysts surveyed by Thomson First Call.

Rambus’ contract revenue for new memory chip designs jumped 31% to $6.03 million. Royalties from chips used in computers rose 17% to $32.6 million in the period.

In the current quarter, the company expects revenue of $38 million to $42 million and operating expenses of $31 million to $34 million, Chief Financial Officer Robert Eulau said in a conference call after the release of earnings.

Rambus had net income of $8.31 million, or 7 cents a share, and sales of $32.5 million in the first quarter of 2004.

First-quarter legal expenses are expected to be $7 million to $9 million, Eulau said. The Infineon trial is scheduled to begin in February and the Hynix trial in March. These costs are “the most difficult to predict,” he said.

In the year-earlier period, the company had litigation costs of $4.18 million.