Rambus Inc will get US$200 million in royalty payments from Intel Corp over five years under an expanded patent-licensing agreement that renews Intel's support for memory chips based on Rambus designs.
Intel will pay Los Altos, California-based Rambus US$10 million a quarter for five years, starting in the current fourth quarter, which ends Sept. 30. The company said fourth-quarter earnings per share, excluding acquisition expenses, will be US$0.6 topping the US$0.1 average estimate of three analysts surveyed by Thomson Financial/First Call.
Intel's fastest chips use a Rambus design, called RDRAM, that accelerates the flow of data between a microprocessor and memory chips and is more expensive than other formats. Santa Clara, California-based Intel has supported designs that compete with RDRAM in some computers, which sparked concerns among some investors that Intel might abandon support for the Rambus format.
"There's been concern that Intel's support was waning. But this is further evidence that Intel is very much interested in supporting Rambus RDRAM systems," said Charles Krause, managing director at New Canaan, Connecticut-based Fairfield Research Corp, which owns about 100,000 Rambus shares.
Shares of Rambus rose US$0.48 cents, or 7.8 percent, to US$6.65, after reaching US$7.29 earlier. They've fallen 82 percent this year.
Intel fell US$2.41, or 9.2 percent, to US$23.66. Intel has declined 21 percent this year.
"We will return to very strong operating profit this year," Rambus President David Mooring said.
Sales for the fourth quarter will be US$27 million to US$29 million. Before the new agreement with Intel was reached, the company said it expected sales to be about US$18.6 million, or 20 percent less than the third quarter's US$23.3 million.
The new cross-licensing accord replaces a previous agreement reached in 1996. As part of that prior agreement, Intel was given the right to buy four million Rambus shares at US$2.50 a share after certain arrangenment were met, said Avo Kanadjian, Rambus vice president. Under the new agreement, Intel relinquished its claims to the shares, Kanadjian said.
The new agreement gives Intel access to more Rambus patents, Kanadjian said. In addition to personal computer chips, Intel will get the rights to patents for chips used in high-speed computer networks, he said.
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