UPDATE 2-Rambus, Infineon end patent dispute; Rambus soars
March 21, 2005 11:50:42 (ET)
(Wraps legal settlement and revenue warning, adds stock action, CEO, CFO, analyst comments, and SAN FRANCISCO to dateline)
SAN FRANCISCO/FRANKFURT, Germany, March 21 (Reuters) - German chipmaker Infineon ((IFXGn.DE)) and U.S. technology licensing company Rambus (RMBS,Trade) said on Monday that they have agreed to settle their patent disputes and Infineon will pay Rambus royalties, sending Rambus shares shares up 30 percent.
The companies, which have sued and counter-sued each other since 2000 in a legal case involving claims over Rambus patents stretching back to the early 1990s, said they had agreed to the immediate dismissal of all pending litigation and have released each other from all existing legal claims, Infineon said.
Rambus, based in Los Altos, California, has been seeking billions of dollars in royalty payments from the global chip industry over the past decade to cover patents that it asserts are used in standard computer memory chips.
Separately, Rambus said first-quarter revenue would be below its prior expectations amid higher-than-expected litigation costs.
But shares of the volatile stock, which have traded largely on litigation outcomes in recent years, rallied 30 percent, or $4, to $17.10, as investors looked past the lower quarterly revenue to future license fees Rambus stands to gain,
The deal calls for Infineon to pay a quarterly license fee of $5.85 million from November 2005 for two years, and may make additional quarterly payments thereafter that could add up to as much as $100 million under certain conditions, they said.
The Infineon settlement comes three weeks after a U.S. federal judge dismissed Rambus' patent infringement claims against Infineon, which Rambus executives said set the stage for the settlement.
"We are satisfied with these terms," Rambus Chief Executive Harold Hughes told analysts and reporters during a conference call. "We also believe that they are in the best interest of our shareholders."
Analyst Ingo Queiser of Kepler Equities in Frankfurt said the that the deal was "very favorable for Infineon" as the company now stands to pay a maximum of some 110 million euros. Infineon had risked paying 150 million to 200 million euros per year, he said.
Shares in Infineon rose 0.6 percent by midday, outperforming the flat German blue-chip index DAX ((.GDAXI)).
Rambus had forecast in January that it expected first-quarter revenue to be in the range of $38 million to $42 million and total spending to be between $30 million and $34 million. Instead, Rambus said on Monday that it expected first-quarter expenses of $33 million to $36 million.
Analysts had been looking for current quarter revenue, on average, of $39.7 million, according to a survey by Reuters Estimates.
"The guidance is fairly self-explanatory," Rambus Chief Financial Officer Bob Eulau said during the call, adding that the results were "solely" due to higher litigation costs.
But Hughes warned investors that they should not use the terms of the settlement with Infineon to extrapolate the terms of future legal settlements Rambus might reach with other companies with which it remains locked in litigation.
He specifically said it sets no precedent with regard to Rambus' litigation versus Hynix Semiconductor Inc. ((000660.KS)) of Korea or Micron Technology Inc. (MU,Trade) of the United States.
© Copyright 2001 - 2005 Reuters. Click Here for Limitations and Restrictions on Use.
March 21, 2005 11:50:42 (ET)
(Wraps legal settlement and revenue warning, adds stock action, CEO, CFO, analyst comments, and SAN FRANCISCO to dateline)
SAN FRANCISCO/FRANKFURT, Germany, March 21 (Reuters) - German chipmaker Infineon ((IFXGn.DE)) and U.S. technology licensing company Rambus (RMBS,Trade) said on Monday that they have agreed to settle their patent disputes and Infineon will pay Rambus royalties, sending Rambus shares shares up 30 percent.
The companies, which have sued and counter-sued each other since 2000 in a legal case involving claims over Rambus patents stretching back to the early 1990s, said they had agreed to the immediate dismissal of all pending litigation and have released each other from all existing legal claims, Infineon said.
Rambus, based in Los Altos, California, has been seeking billions of dollars in royalty payments from the global chip industry over the past decade to cover patents that it asserts are used in standard computer memory chips.
Separately, Rambus said first-quarter revenue would be below its prior expectations amid higher-than-expected litigation costs.
But shares of the volatile stock, which have traded largely on litigation outcomes in recent years, rallied 30 percent, or $4, to $17.10, as investors looked past the lower quarterly revenue to future license fees Rambus stands to gain,
The deal calls for Infineon to pay a quarterly license fee of $5.85 million from November 2005 for two years, and may make additional quarterly payments thereafter that could add up to as much as $100 million under certain conditions, they said.
The Infineon settlement comes three weeks after a U.S. federal judge dismissed Rambus' patent infringement claims against Infineon, which Rambus executives said set the stage for the settlement.
"We are satisfied with these terms," Rambus Chief Executive Harold Hughes told analysts and reporters during a conference call. "We also believe that they are in the best interest of our shareholders."
Analyst Ingo Queiser of Kepler Equities in Frankfurt said the that the deal was "very favorable for Infineon" as the company now stands to pay a maximum of some 110 million euros. Infineon had risked paying 150 million to 200 million euros per year, he said.
Shares in Infineon rose 0.6 percent by midday, outperforming the flat German blue-chip index DAX ((.GDAXI)).
Rambus had forecast in January that it expected first-quarter revenue to be in the range of $38 million to $42 million and total spending to be between $30 million and $34 million. Instead, Rambus said on Monday that it expected first-quarter expenses of $33 million to $36 million.
Analysts had been looking for current quarter revenue, on average, of $39.7 million, according to a survey by Reuters Estimates.
"The guidance is fairly self-explanatory," Rambus Chief Financial Officer Bob Eulau said during the call, adding that the results were "solely" due to higher litigation costs.
But Hughes warned investors that they should not use the terms of the settlement with Infineon to extrapolate the terms of future legal settlements Rambus might reach with other companies with which it remains locked in litigation.
He specifically said it sets no precedent with regard to Rambus' litigation versus Hynix Semiconductor Inc. ((000660.KS)) of Korea or Micron Technology Inc. (MU,Trade) of the United States.
© Copyright 2001 - 2005 Reuters. Click Here for Limitations and Restrictions on Use.
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