Bloomberg News

Rambus Rises After Reaching Patent Settlement With Nvidia

February 09, 2012

(Updates with closing share price in final paragraph.)

Feb. 8 (Bloomberg) -- Rambus Inc., a memory-chip designer that gets most of its revenue from royalties, rose the most in 1 1/2 months after reaching a patent agreement with Nvidia Corp., ending a legal battle over graphics technology.

Financial details weren’t disclosed. The accord covers a broad range of semiconductor products offered by Nvidia, Sunnyvale, California-based Rambus said in a statement today.

“This settlement was a surprise,” said Hamed Khorsand, an analyst at BWS Financial Inc. who recommends buying Rambus shares. “It also validates patents Rambus has been starting.”

The agreement clears away any threat of a ban on U.S. imports of products with graphics chips made by Santa Clara, California-based Nvidia, and provides a new source of revenue to money-losing Rambus, which reported $312.4 million in revenue last year.

Rambus had filed two patent-infringement complaints against Nvidia at the U.S. International Trade Commission, which has the power to block imports of products that violate U.S. patents. In the first case, the Washington-based agency sided with Rambus, and a U.S. appeals court heard arguments in October. A trade judge was scheduled to issue his findings in the second case on March 2.

Rambus, which has been embroiled in litigation for more than a decade against companies that refused to license its patents, reached a five-year agreement with Broadcom Corp. in December. Broadcom also had been named in the ITC case.

Starting to Settle

“It’s interesting that one by one, the companies involved in the ITC matter are starting to settle,” Khorsand said. “Companies might be looking at it from a standpoint where the patents will be upheld and Rambus would be able to force them to stop selling into the U.S.”

Rambus climbed 9.1 percent to $8.24 at the close in New York, the biggest increase since Dec. 23, when it announced the Broadcom agreement. The shares are still about 54 percent below the closing price on Nov. 15, the day before Rambus lost a jury trial in which it alleged that Micron Technology Inc. and Hynix Semiconductor Inc. conspired to prevent its memory chips from becoming an industry standard. Nvidia rose 3.6 percent to $16.31.

--With assistance from Susan Decker in Washington. Editors: Michael Shepard, Romaine Bostick

To contact the reporter on this story: Heather Perlberg in New York at hperlberg@bloomberg.net

To contact the editor responsible for this story: Cecile Daurat at cdaurat@bloomberg.net


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