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Legal costs cut Rambus earnings

Q1 revenues up, though

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Memory technology developer Rambus said its income and earnings dipped during the first quarter of its fiscal 2005, despite a strong year-on-year gain in revenues.

The three months to 31 March 2005 yielded $39.6m in revenues, up 22 per cent on the year-ago quarter, but made for a more modest increase of three per cent on Q4 FY2004. The bulk of Rambus' revenues - $33m - came from royalties, which were up a single percentage point sequentially but 20 per cent up on the year-ago quarter's total, on the back of an increase in SDRAM and DDR royalties, Rambus said.

The remaining $6.6m came from contracts, which showed a nine per cent sequential and a 30 per cent year-on-year gain, the result of the XDR memory and FlexIO interface technologies licensed in 2003.

Rambus recorded a net income of $4.4m (four cents a share) for the quarter, down from $6.5m (six cents a share) in the previous quarter and $8.3m (seven cents a share) in Q1 FY2004.

Falling income on growing revenues points to rising costs, and sure enough, Rambus said its cost and expenses had risen during the quarter, primarily due to all the litigation it's involved in. For example, costs went up $10.8m year on year, from $23.9m to $34.7m - 65 per cent of the increase, $7m, came in the form of legal costs. The rest, Rambus said, arose from "increased staffing and compensation costs to support current and future business opportunities".

Having chased Infineon for alleged infringement of patents relating to GDDR memory, Rambus settled its outstanding legal battle with the German memory maker.

On the upside, the company ended the quarter with $460m in the bank, up $224m on the previous quarter, thanks to a big sale of convertible notes.

Separately, Rambus said it had reached a five-year agreement with NEC, allowing the Japanese company to maker memory controllers compatible with SDR, DDR and DDR2 SDRAM as well as future memory controller innovations. Rambus said it will receive royalties on sales of licensed products. ®

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