Rambus Rises After Reaching License Agreement With Broadcom
December 27, 2011, 11:36 AM ESTBy Cecile Daurat
(Updates with closing share price in fifth paragraph.)
Dec. 23 (Bloomberg) -- Rambus Inc., which gets most of its sales from royalties, had its biggest gain in a month after signing a patent license agreement with Broadcom Corp. and settling all claims with the chipmaker.
The five-year accord covers the use of Rambus innovations in integrated-circuit products offered by Irvine, California- based Broadcom, according to a statement yesterday after the markets closed. The terms are confidential.
Rambus is still 55 percent below the closing price on Nov. 15, the day before losing a jury trial over allegations that Micron Technology Inc. and Hynix Semiconductor Inc. conspired to prevent its memory chips from becoming an industry standard. The Broadcom agreement may generate about $40 million annually, said Hamed Khorsand, an analyst at BWS Financial Inc.
Today’s announcement “comes at a time when investors doubted Rambus’s patent portfolio,” Khorsand, who recommends buying the shares, said in a note to investors. “The deal with Broadcom provides another stream of royalties, which could end up having a material impact to the quarterly numbers Rambus reports.”
Rambus, based in Sunnyvale, California, jumped 12 percent to $8.21 at the close for the biggest increase since Nov. 17. Broadcom was little changed at $29.77.
Rambus has spent the past decade suing companies that refused to license its patents. On Dec. 1, 2010, the company filed a patent-infringement complaint against Broadcom, Nvidia Corp. and other chip companies in an effort to boost royalties from its inventions.
--With assistance from Ian King in san francico and Susan Decker in Washington. Editors: Cecile Daurat, James Callan
To contact the reporter on this story: Cecile Daurat in Wilmington at cdaurat@bloomberg.net
To contact the editor responsible for this story: Cecile Daurat at cdaurat@bloomberg.net
