Rambus Surges on FTC Patent-Royalty Ruling

Shares of Rambus gained more than 24% yesterday to $23.50 after the FTC ruled Rambus can continue collecting royalties on certain patented memory technologies over a three year period, although at lower rates than Rambus' management believe is fair. More importantly, the ruling was a relief for investors expecting the worst, since it does not apply to second-generation technology and does not nullify any Rambus patents, which would have forced it to pay back royalties received. The FTC said Rambus can charge a maximum royalty rate of 0.5% for DDR SDRAM and 0.25% for SDRAM. A BWS Financial analyst says the ruling could have been much worse and adds, "In three years, we would not expect RMBS to be making much, if anything, from the products the FTC is capping." Rambus plans to appeal the decision, saying it is "disappointed with the Commission's remedy" in regard to DDR SDRAM and SDRAM.

Sources: Press release, SmartMoney, MarketWatch
Commentary: FTC Rules Against Rambus, Shares Plummet 26% [Aug. '06] • Updated WSJ Options Scandal Scorecard
Stocks/ETFs to watch: Rambus (RMBS). Competitors: Micron Tech. (MU), Qimonda AG (QI)

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