I have to admit that Rambus' earnings conference call yesterday was one of the better ones to date. There were two new analysts who called in with questions along with the other three that always do. They responded to concerns the shareholders have voiced for some time now. They have been doing better since the Annual Shareholders Meeting. For those who don't know what happened, here's a bit of background:
Rambus needs to grant options as part of they pay package to retain their top talent and future employees. However, we (the shareholders) were getting frustrated that since John Dansforth (their general counsel who initiated the AT case) was booted, their communication to us has, quite frankly, sucked. Stuart Steele, one of Rambus' largest shareholders, rallied up the shareholders and the mutual funds that held a lot of shares, asking them to vote NO on option grants this year. It still passed, but only by a 65%. Rallying 35% of the votes is huge, and I think they got the message and became a lot better at communicating, rather than their standard "can't comment" when we ask litigation questions.
On another note, settling with Hynix, Lavelle may have indicated some elements of a possible deal
The exchange below highlights what may be involved:
Philip Zera - Algorithm Capital
So Hynix is conceivably, if they participate in the EU framework then they would pay the lower rate outside of the United States, correct?
Thomas Lavelle
No, they would get to pay the total rate worldwide for all of the affected products going forward. It would not in any way affect the $400 million judgment that is already been entered.
Philip Zera - Algorithm Capital
Yes, right. I just meant going forward.
Thomas Lavelle
Yes, going forward, they theoretically could enter into a worldwide license agreement with us assuming this goes forward and I think it probably will. They could take that forward looking rate as their long, forward-looking settlement.
So Tom thinks the EU proposal is a done deal. That is great news and may be a precursor to dominoes beginning to fall.
If Rambus lets Hynix escape the AT trial for a nominal fee, the above discussed possibility where Hynix takes the EU deal may make sense as Rambus still takes Samsung and Micron into the AT trial.
Rambus doesn't need Hynix to be part of the AT trial so as long as they sign a forward license, pay the back damage and pay a negotiated(probably small) amount to be removed from the AT trial.
The benefit to Rambus of ending the Hynix litigation is the cash flow implication which would allow Rambus to pursue the acquisitions that they are pursuing.
The stock price would spike and acquisitions could be made with stock in conjunction with cash.
I'm actually HOPING that the stock price goes down in the interim (even though I do have some Aug call options). Hopefully, once the remaining two writs are denied, I'm going to load up on even more shares/options. Too many things can happen after those writs.