LOS ALTOS, Calif. -- Spiraling legal fees, which could reach $5 million in the current fiscal quarter, are eating heavily into Rambus Inc.'s earnings, company officials told financial analysts after reporting $13.2 million in net income for the three months ended Dec. 31.
Geoffrey Tate, chief executive officer, said three court trials are slated in February and March, which will run up legal costs. He also told analysts that additional lawsuits might be filed against Rambus. "It something that happens with large companies going against a small company," he said.
Two separate non-jury trials against Hyundai Electronics Industries Co. and Micron technology Inc. will occur Feb. 19 in Germany. The patent suit against Infineon technologies AG will go to jury trial March 13 in the federal district court in Richmond.
Tate said the Micron case is tentatively slated for trial in October, and the German trial against Hyundai has been deferred until 2002.
Rambus didn't refer to its patent case against Hyundai in the High Court of Justice in London, which was put on hold until the European Patent Commission rules on the validity of Rambus synchronous DRAM patents.
As reported this week, Rambus has threatened Hyundai, Infineon and Micron that it might refuse them synchronous DRAM licenses under its patents if they lose their litigation with the firm. Asked if any negotiations were ongoing to settle the suits, Tate would not reply directly, instead saying, "We always stand ready to negotiate a settlement up to very day of any trial."
The conference call with analysts followed Rambus first fiscal quarter financial report showing $13.2 million net income on revenues of $34.7 million, compared with $2.6 million earnings on $11.9 million revenue for the same period a year ago (see Jan. 11 story). The revenue jump included the first SDRAM royalties from Samsung Electronics Co. and Mitsubishi Electric Corp., which Tate said included the one-time licensing fee from both companies.
In the traditional SEC-required cautionary note, Rambus said its royalties on Direct Rambus DRAMs could be impacted because "prices of RDRAMs remain high compared to SDRAMs." Tate told analysts that the present Direct RDRAM price premium over SDRAM may be $50 in some cases, due to the synchronous memory free fall. However, higher Direct RDRAM volumes spurred by Intel's Pentium 4 launch and cost-cutting efforts are expected to reduce the premium to 20% in the second half of 2001 and to 10% in 2002, he added.
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