Rambus Inc, which licenses computer-memory patents to chipmakers, said fiscal third-quarter profit fell 20 percent as legal costs rose. Revenue may decline 20 percent in the fourth quarter, the company said.
Rambus shares fell as much as 19 percent in after-hours trading on Thursday. Net income for the period ended June 30 was US$3.71 million, or US$0.04 a share, meeting analysts' forecasts. The company reported profit of US$4.62 million, or US$0.04, a year earlier. Revenue rose to US$23.3 million from US$17.8 million.
A slowdown in personal-computer sales hurt third-quarter profit, and will cause fourth-quarter revenue to fall, the company said. Legal costs rose to US$8.76 million from US$1.67 million a year earlier as Rambus pursued patent-infringement lawsuits against 3 memory-chip companies.
Operating profit will be "around break-even" for the next three quarters, Chief Financial Officer Bob Eulau said on a conference call. The company is expected to have a profit of US$0.05 in the fourth quarter, the average estimate of three analysts polled by First Call/Thomson Financial.
Employees were told to take a mandatory two-week vacation in the second half of this year, Eulau said.
"With the slowdown in the PC and other markets, we expect the DRAM industry to continue to struggle for the next few quarters," Rambus Chief Executive Geoff Tate said in a statement.
The shares of Los Altos, California-based Rambus fell as low as US$8.85 after hours before climbing to US$9.86. In regular trading, before the news was released, Rambus rose US$1.28, or 13 percent, to US$10.88. The shares have fallen 88 percent in the past year.
The profit decline was "what we expected," said Mike Green, managing partner at Benham & Green Capital Management LLC, which owns 206,000 Rambus shares. "The legal costs were there. I'd like to see the company move beyond that. If they get [court victories], it would be a lot of gravy."
Memory chips, microprocessors and other semiconductors based on Rambus designs speed data in computers and other devices such as Sony Corp's PlayStation game consoles. The company gets much of its revenue from royalties and license fees from chipmakers.
Dynamic random access mem-ory, or DRAM, chips are the main memory chips used in personal computers.
Rambus is expected to benefit once personal-computer sales rebound, particularly at Dell Computer Corp, Green said.
"One big boost is that Dell is No. 1 in the US and Dell's a big backer of Rambus technology," he said.
Rambus is suing Infineon Technologies AG, Micron Technology Inc and Hyundai Electronics Industries Co for alleged patent infringement.
The companies have denied the allegations. In May, a US District Court Judge in Richmond, Virginia, threw out Rambus's remaining three claims of patent infringement against Infineon.
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