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TUESDAY, OCTOBER 5, 2004
11:00 A.M.
PRECEDENTIAL OPINION
03-5120 JERRY TODD, ET AL. v. UNITED STATES
On appeal from the United States Court of Federal Claims.
Judgment affirmed.
Opinion by Rader, Circuit Judge.
Rader just issued a precedential opinion on 10/5. Either that means we probably won't hear anything soon on the Rambus case or Rader isn't the one handling the second writ. I hope it's the former.
Good questions Paul. I hope they get answered as well. I think we all deserve some clarification and technology updates.
"Hey, is that you over on TMF as SkepticalWill?"
Yeah - that's me. The Yahoo MB is unreadable now so I finally decided to shell out a few bucks so I could read the fool board. They've got some solid contributors over there and no political BS - much the same as here, but for whatever reason, they get more traffic.
"Rambus mentioned that they have one design win for XDR (a large volume game company)..."
Are they referring to Sony and XDR's use in the PS3???
I knew I should have sold short before I made that comment about Rambus' stock price holding up well.
Happens every time.
Interesting trading on Rambus lately. It's held strong even in a weak market like yesterday and despite a steady stream of negative litigation news (the CAFC enbanc failure, Hynix attempt to invalidate Rambus patents due to litigation misconduct, Payne's new Marksman definitions etc...). Given the seeming contradiction between price reaction and litigation news, I have to quote the proverbial message board cliche - somebody knows something.
My guess is that earnings will be strong and/or Rambus will announce a new licensing deal. Or - maybe - Rambus will announce a settlement with Micron.
From Harris Nesbitt...
"The company remains on target to release data on
its Phase III trial for wet AMD at the American Academy of Ophthalmology
meeting on October 23-26. Wet AMD affects 200,000 Americans annually and has a
prevalence rate of 1.5 million. Consequently, depending on the data, the
company has the potential to participate in a multi-billion-dollar market
opportunity. We expect the company to file an NDA in 4Q04 and receive FDA
approval in late 1H05."
I'm not sure how big of an event this will be given that ACL already has annual revenue of 3.7 billion. It might be good for a 20% move one way or another.
"They'd need Ph.D.s for that, not M.D.s
Really."
True, but it's better than CFA's with no biotech experience covering these stocks. The funny thing is that science Ph.D.s could make a lot more money pushing stocks for firms like Merrill and Goldman than they will playing with mice.
Yeah - it's Monane and company. He's one of 3 MDs with their names at the top of the research report. I really like the way Needham is stacking their biotech research group with MDs - guys who actually understand the science.
They have a buy on Renovis and a 15 target. They expect the upcoming second interim look at safety will be positive and may fuel some investor interest. They also note that the results of the SAINT Phase III probably won't be out till mid '06.
Rambus' quarterly conference call is next Thursday. Investors have the opportunity to submit questions. Here's the link:
http://investor.rambus.com/questions.cfm
I've already submitted a few:
What is the status of the Micron litigation and why?
Will Rambus seek additional Writs from the CAFC before the start of VA2 in November?
Will the newly pierced ACP have a material impact on litigation?
(i.e. - is there anything damning in those documents)
Does Rambus mgmt sense the same hostility from the FTC commission that investors do?
I couldn't think of any more, but I hope people will submit others.
"Needham’s Mark Monane (the best biotech sell-side analyst, in my opinion)"
I have to agree with you on Monane - top notch. This is one of the few times that Monane and Birchenough (Lehman - probably the second best) disagree. The problem is that you can't really use numbers from scans that are unreadable or from patients who don't show up for the second scan. The question is whether those 30% are really all unreadable.
I think the final data should prove to be interesting.
Some (Nukejohn and Meonthebus) are a little more optimistic than that. I would assume that even a loss in VA2 would not preclude Rambus from continuing to collect from Samsung, Elpida, Toshiba, and Sony. I think 10 bucks might be a base if last quarter's numbers weren't a fluke and if the legal costs were zero.
I expect Rambus will at least have some good news for Q3's earnings call whether it be beating estimates or new collaborations or licensing deals. And I think it's about a 50/50 that the CAFC comes through on the second writ. I'll wait for those events and then I'll buy some puts and perhaps ride the Payne train down to 10.
Now that ACP is officially pierced and the CAFC has declined to come to the rescue, I expect Hynix will be allowed discovery in their case and I also wouldn't be surprised to see the FTC commission allow complaint counsel to reopen the entire case based on "new" developments. The road to victory and justice does not seem to be getting any shorter. I guess we better hope there is nothing damning in all those documents, but I'm sure Rambus' adversaries will be able to make something out of nothing anyway.
So - in the next 6 months, we can expect Rambus to lose VA2 and lose at the FTC. Perhaps, the VA2 case gets to the CAFC by year end 05 with resolution by Q1 06 and perhaps a similar resolution with the FTC appeal. Then Infineon will appeal the CAFC decision (if not to their liking) to the Supreme Court and then...??? By the middle of 2006, there should also be some progress in the antitrust civil case in CA. And perhaps CELL will be on the market in mass numbers.
So I think 2006 will be the year for Rambus. If both Micron and Hynix plead guilty to the DOJ, it MIGHT throw a monkey wrench in the plans of the FTC commission and Judge Whyte might yet decide to do the right thing and bifurcate the trial and issue SJ's of infringement. And then there could be a settlement. Barring one of the above, it looks like 2005 will be a long fruitless year for Rambus.
Sorry for the incoherent ramble. I have a question - how much of the current stock price has a Rambus VA2 loss baked in. How low will it go???
"I haven't checked option prices and premiums, but could be worth another straddle play,"
I'm still on the sidelines. I meant to get in yesterday when it dipped - at least buy some calls. I think the reaction to OSCAR will be muted - maybe 5 bucks one way or another and the premiums are still pretty high. I'm going to wait till around the final data release and then try to play that event.
As far as Nissen's comments today - I think he's probably getting a lot of pressure from his boss, Topol.
The point of my previous post is that there is a strong correlation between plaque regression and a reduction in cardiac events. Hence, there is a good chance ARISE will meet its endpoint. Also, I believe AGIX has a SPA for the ARISE trial and so, if it meets its endpoints, the FDA will most likely approve it on its own merits and NOT require a confirmatory pivotal trial.
The ARISE phase III by all accounts is a well run trial and sufficiently powered for success should AGI-1067 actually have biological activity. Here's a comment on the phase III from Needham...
"The real focal point of the valuation thesis remains the outcome of the Phase 3 ARISE trial, a well-designed
(prestigious academic centers), big (more than 4000 patients), and (potentially) pivotal trial."
One other thought - I think people are getting hung up on the point of the CART-II and what really matters to patients and the FDA - that is a reduction of cardiac events. If the AGI-1067 shows a reduction of 20% in cardiac events above and beyond statins, the FDA will approve it and consumers will buy it. There won't need to be a confirmatory trial. The point is that when the final data is analyzed, if the READABLE IVUS scans (30% not readable) from the patients that showed up for the follow up (20% didn't) show a stastically significant regression from baseline, the odds of success in ARISE are pretty darn good.
JMSO!
I missed my opportunity to pick up some calls when AGIX dipped to 28ish this morning. Interesting that the stock finished up over 4% after that Barron's article. Maybe shorts are getting out or maybe Lehman is right.
Here's more relevant comments from Lehman (emphasis mine)...
"Positive Plaque Volume Benefit Likely to Predict Phase III Success
While we have recently argued that plaque volume burden is not the only determinant of ultimate coronary events and that
CART-II disappointment would not be predictive of ARISE phase III failure we do believe that the positive predictive value of
IVUS studies has been well established. With a high degree of confidence in the final CART-II trial outcome and several
outcomes studies like PROVEIT demonstrating a clear link between plaque volume benefit and coronary event reduction we
believe that the phase III ARISE study for AGIX is very well handicapped to succeed. Indeed, with several regression studies
like FATS (mevacor) and HATS (pravachol) suggesting reductions in coronary events in excess of 70% with smaller plaque
volume reductions than seen here in CART-II we believe that AGI-1067 will have no problem in demonstrating a greater than
20% reduction in coronary events in the ARISE study later next year. To the extent that the benefit of AGI-1067 may extend
beyond plaque volume reduction and actual improvement in endothelial function and plaque stability we believe the odds of
success are all the better."
I just got back from a week at Disney World or Basic Training as I like to call it. It's a test of one's mettle to take a 2 and 4 year old on a week long vacation anywhere let alone during a hurricane (Jeane). Then throw in the 90 degree temps and 90% humidity and a wife that sets a gruelling pace (we have to cram as much fun as possible into each minute) and by the end you think you're ready for the marines. We were up by 0600 hours every day to boot. All in all, I think I lost a few pounds and the kids had fun so it was a success.
As for Rambus, I see Payne is up to his old tricks. I was wondering when he was going to deny Rambus' motion for discovery on Infineon's spoliation. Apparently there wasn't enough sauce for Rambus after Payne ladeled it all out to Infineon. And now we have synchronous memory device marksman crap to deal with. Anyone have any thoughts on how damning this piece is?
I have to agree wholeheartedly with Nick that Rambus will lose quickly in VA2. I'm wondering what the downside will be. I'm probably going to buy some puts once the timing of the trial is set in stone.
This is the story I love to hate.
"That’s interesting because I think this is one of the most likely outcomes from ARISE. An important question for investors is whether AGI-1067 will still be approvable if this occurs."
The reason I said that is I believe there have been studies showing a strong correlation between the halting of progression and or regression and the number of cardiac events. I would think if AGI-1067 is truly reducing plaque, a statistically significant decrease in cardiac events is a slam dunk. They only need a 20% reduction in events from ARISE to be successful. (I believe they have a SPA)
I'm still torn here - Birchenough from Lehman, who's made some good calls, upped his target to 50 bucks and he placed high odds on the success of ARISE. However, I like Monane at Needham as well and he's neutral on it because of the valuation.
If it reacts badly to the Barron's article, I might buy a few Jan calls. If the remaining scans confirm the original, a partnership should be inevitable. And if OSCAR is good, that will help too.
One other thing - I saw a number of your post on Yahoo and I thought I would leave you with this thought from the Lehman report. I'm not sure the thrown-out data is a big deal...
"Interim Analysis is Appropriate
While there have been some questions regarding the impetus for conducting an interim analysis and the inclusion of the
Cleveland Clinic as a third party reviewer we believe that the conduct of this trial is beyond reproach. In particular, we believe
that both investigators, Dr. Tardif and Dr. Nissen, still remain blinded to which patients received drug and that the true impetus
for including the Cleveland Clinic as a third party reviewer was the emergence of technical issues with certain scans that
precluded accurate analysis of the study. While AGIX has not provided extensive detail on the exact timelines of events that
generated the need for the inclusion of the Cleveland Clinic we believe that it was likely that a higher preponderance overall of
technically inadequate scans prompted the need for an independent third party to exclude scans that could not reasonably be
interpreted. Technically inadequate scans typically arise from insufficient length of diseased vessel, calcifications of the
vessel which interfere with the IVUS signal and tortuous twisting vessels that cause too much rotation of the IVUS catheter
that in turn impacts IVUS signal quality. In the REVERSAL study roughly 7-8% of such technically inadequate scans were
removed and the explanation of a much higher rate, closer to 30%, likely provided reasonable impetus for an independent
review. We would remind investors that while typical IVUS atherosclerosis trials like REVERSAL exclude these patients at
the outset of a trial the CART-II trial was initially designed as a restenosis trial where calcifications and vessel tortuosity are
less of a concern. As such, we believe that the explanation provided by AGIX and its investigators for the involvement of the
Cleveland Clinic is highly credible and that the rationale of removing patients with technically inadequate scans has strong
precedent and was conducted in an appropriate manner in this instance. Ultimately the supportive statements of both Dr.
Nissen and Dr. Tardif and their expressed interest in submitting this data for publication in a high caliber journal speak to the
rigor of the underlying data collection process and overall trial conduct."
Who knew on AGIX - even the bullish analysts are/were only giving stastically significant plaque regression a 10% chance. I haven't listened to the conference call yet, but I'm curious whether AGIX has to include those data points they threw out when they determine if there is a statistically significant regression in patients once all the data points are in? How many were thrown out and how many will be included in the FINAL analysis?
Dew- I noticed you mentioned intent to treat - does the company have an obligation to show these numbers instead of the scans they actually analyzed? When CART-II is said and done, does AGIX begin a phase III attempting to repeat CART-II results or just use ARISE results? Can they get a positive labelling based on a combination of CART-II and ARISE results?
As for you #3 "3. No benefit in reducing SAE’s but a statistically significant reduction in plaque volume on an intent-to-treat basis (i.e. no cherry picking of data)."
I don't think this is possible to show plaque regression and have no benefit in reducing SAE's - or at least extremely unlikely.
As for whether it's binary - scenario 1 will lead to a 50 dollar stock price and all other scenarios will lead to a major sell-off IMO, so I think it's still binary, but the event won't happen until next year.
In the short-term, if the final analysis confirms the interim, they will bought or partnered quickly and that 50 dollar stock price will probably happen this year.
Well - I looked on Amtech's website and none of the three Stooges is on their coverage list, but if I'm looking at this from a sell-side / investment banking firm's POV, positive coverage of Rambus has little to offer in potential investment banking fees. B. Riley has a pretty good lock on the share buybacks Rambus does to fuel their option grants. I would think the three Stooges will need additional financings and advice to stay solvent once they pay up to the DOJ, the OEMs, the class action suits, and of course Rambus. What better way to pick up MM clients for Amtech then to push a settlement with one of their fiercest enemies.
JMSO
I don't think people (at least on the Yahoo MB) are handicapping this event enough. The CART-I data was not statistically significant and could be little more than noise. All the "experts" are staying on the sidelines including potential partners. The CART-I data has been out for two years and AGI-1067 still doesn't have a partner. Big Pharma will know more than you or me what the potential is for this compound. The premiums have gone sky high on the options so it makes playing the event with a long straddle risky. I rode the volatility wave (got in early) on a long staddle and for now I'm mostly out. I have some puts that are paid for by the house. It will be interesting.
Good luck.
"Yikes. Talk about dropping a hint!! What kind of last sentence is that??
What did Mr. Danforth say? Did he say the AT case won't begin until the patent cases are resolved??"
It is late - at least for me, but this suggests that the AT case could be delayed years and years as final resolution to the patent infringement cases doesn't seem close at hand. I would think they would want to accelerate the AT to really put the heat on the MMs.
More comments from B. Riley's Mike Crawford...
"Regarding RMBS shares, we believe mainstream media still has not picked up on the “eliminate competition” angle--concentrating instead on the perceived harm to the PC OEMs. (In this regard, we would argue that the same OEMs that were hurt by rising DDR prices in 2002 were also helped by the below cost DDR dumped into the market to kill RDRAM in 2001.) IFX, to its credit, is doing its best to befuddle investors by stating that there is no link between the price fixing cartel felony and the infringement litigation with RMBS. In contrast, a close read of IFX North American President Robert LeFort’s statements reveals that he is not making the same claim with respect to RMBS’ civil price fixing complaint. He can’t. In fact, we believe IFX is in a particular predicament regarding it potential civil antitrust liability to RMBS, we believe, due to its:
1) New criminal plea admitting a “conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices of Dynamic Random Access Memory.” (emphasis ours)
2) The presence of IFX’s notorious “Deadly Menace” overhead slides from 1992 that were recovered from the hard disk of IFX JEDEC rep Willie Meyer’s personal computer (foiling an apparent attempt to delete the files), albeit discovered too late to be used in the first infringement trial with RMBS.
3) New third party evidence discovered through FTC deposition (and now likely the DoJ!), including emails from and to IFX pertaining to RMBS that should have been provided (but was not) in infringement trial discovery, indicating continuing spoliation attempts."
Apparently we are on the "ob" kick (obtuse and obfuscate) so I would like to add that based on my observations, you are both being obstinate in your respective objectives. I think you're both super smart, albeit obdurate, but that could just be my obsequious nature shining through.
Additional miscellany...
I can't believe that Micron will be escaping scot-free from the mighty DOJ. I'm sure IFX, Hynix, and Samsung will find it interesting that only the US MM is escaping the wrath of the US DOJ.
So now what happens at the FTC? We know that Rambus has requested that the FTC look into the collusion activities of the MMs as highlighted by Judge McGuire and now confirmed by the DOJ. Will the FTC attempt to save face, affirm the ID by Judge McGuire and begin its own case against the MMs or does the political factor trump all?
What is the ripple effect, if any, from the Infineon plea to Rambus' patent infringement cases? Will Whyte or Payne or the CAFC be moved by this admission of guilt from IFX? (I can answer the Payne part now - no - he won't give a rat's ass - he won't allow the CAFC decision, or the McGuire ID, why the hell would he allow the DOJ evidence in.)
Stock Hawk on Yahoo pointed out that the complaint/wording of the DOJ investigation mentioned that part of the price-fixing was meant to eliminate competition. Now - is that competition Rambus (Stk_hawk's conclusion) or is Toshiba or Elpida or other MMs who didn't go along with the price-fixing?
How can IFX hope to succeed with its 17200 affirmative defense (if the CAFC does not preclude it) when it has admitted to "dirty hands" in other dealings. Infineon is no innocent party.
Related to this thought, since Payne has allowed IFX to renew waived and unappealed defenses due to "new evidence", will Rambus be allowed to take discovery on the DOJ evidence? It's the whole sauce deal that Payne is so fond of. Infineon should have produced the memos and other communications that Rambus acquired after the completion of VA1 and now the price-fixing information that the DOJ has gathered. Tell me there's no spoliation there. Rambus could argue that Infineon's price-fixing "SCHEME" was "PART AND PARCEL" of their strategy to lie, cheat, and steal at any cost. Infineon "WATCHED" and it "FIXED PRICES". And what about IFX's business ethics? Desmaris and Payne love to highlight the CAFC remand where Rambus' ethics are called into question. Who's the real deviant here?
Finally, I'll leave you with some further thoughts from Mike Crawford at B. Riley...
"We believe the IFX settlement with the DoJ increases the likelihood that it will settle with RMBS in the parallel civil case. By extension, the same logic applies to Micron and Hynix as well. While RMBS’ price fixing complaint is not synonomous with its infringement litigation with these three OEMs, we also believe there now is an increased probability of global settlement of all licensing issues with these companies, including past (RDRAM, DDR) and future (DDR II, XDR, FB-DIMM, etc) technologies."
Some thoughts...
First Elixe - I'd like to revive our twice debated argument about possible motives (other than killing of RDRAM) for the MMs to lower prices below cost. Perhaps we've covered the following ground and I've already forgotten, but how do you explain the MMs selling "their" next generation memory (DDR) at below SDRAM prices. I understand if their is a glut that they need to lower prices, but why would they sell DDR (the more expensive to manufacture) at below SDRAM prices?
The following are some relevant thoughts from Mike Crawford at B. Riley...
"Regarding RMBS, which has a parallel civil case against these same DRAM OEMs, perhaps most interesting is that the DoJ stated that the “scheme” took place between July 1, 1999 and June 15, 2002. Most RMBS shareholders know this time period as equating to when Intel initially chose RDRAM as the preferred memory interface solution for its Pentium line of processors, through the time when Intel announced that RDRAM was off its future roadmap-in favor of DDR, DDR II etc. What attracted the DoJ’s (and RMBS’!) attention, we believe, is that DDR chips hit the market initially at a lower price point than the inferior SDRAM technology. Then, once RDRAM was moved off Intel’s roadmap, DDR prices skyrocketed. From RMBS’ FTC case and civil complaint, we know that there is ample evidence (meeting minutes, deposition testimony, emails, etc.) that DRAM manufacturers illegally conspired to keep RDRAM out of the market."
"LeFort said Infineon is also nearing an agreement with major computer manufacturers that would compensate them for any alleged overcharges. That settlement is expected to cost the company no more than $90 million, LeFort said."
The $160 million to the DOJ plus the $90 million here accounts for the entire $250 million that IFX set aside. I don't see any for Rambus.
I remain skeptical that IFX's settlement with the DOJ will benefit Rambus at all. Someone quoted a German article where the IFX spokesperson said that the settlement has no effect on its Rambus case. Both the DOJ and IFX mentioned that the "victims" were the OEMs and that restitutions/settlements were being negotiated with the "customers". Rambus is neither. I really believe that the MM's hatred of Rambus runs deep and that IFX has the upper hand in the VA2 trial unless the CAFC comes to Rambus' rescue in a big way. If the nature of the DOJ investigation only includes the time period after the MM's conspired to kill Rambus, it will not help Rambus in its Anti trust suit either.
I liked the pop in stock price, but I can see it slowly returning to the 13's. I hope I'm wrong.
Interesting post on Yahoo by rambusorg
The former FTC Chairman Timothy Muris joins O'Melveny & Myers, the law firm representing Hynix in the FTC case against Rambus. What a coincidence!
http://biz.yahoo.com/prnews/040908/law134_1.html
http://www.omm.com/webcode/navigate.asp?nodeHandle=862
It's so hard not to believe in conspiracies when it comes to Rambus. I'm approaching the point of apathy at least for the time being. I have my 07 leaps - I should probably just check in on Rambus once a year and then maybe it will feel like they are getting somewhere.
Cor - thanks for the info. I should have used the old ;> when I said I had never heard of Panasonic. I have a DVD player, TV, and video camera made by them.
"Matsushita is already on board, so to speak."
Your pun wasn't wasted on me.
Is Matsushita a tier one company? ; )
Panasonic? Never heard of it.
Elixe - I'm somewhat afraid to ask, but do you see any of Rambus' technology/solutions going mainstream ever? I'm assuming of course that Rambus isn't able to prove infringement on SDRAM and DDR.
I'm trying to arrive at some fair valuation for Rambus ex-SDRAM and DDR. There are some who are placing a lot of trust in the rest of the Rambus pipeline and I'd be interested to hear a more skeptical view from an intelligent EE like yourself. TIA.
General question for those who are more technically literate/aware than me (which I guess would be everyone on here) - How big of a success might Rambus' DDR/XDRAM interface controllers be? Is there significant demand for this product and siginificant competition as well? TIA.
Elixe - do you have a login and password for those links???
We got our first spam???
"Note that the AMB, (Advanced Memory Buffer), will be a JEDEC standard. (Page 7)."
So in other words, JEDEC won't be advocating/using PCI Express from Rambus and Cadence???
As for XDRAM, what about volume usage in graphics chips from NVDIA or ATI???
What a bunch of sorry, deceptive, whiners!
"I never care about legal issues of the industry," said Nam Hyung Kim, an iSupply Corp. senior analyst based in El Segundo, Calif. "They're always happening. None of the legal issues surrounding the DRAM market have impacted the market in DRAM history."
This "analyst" was talking crap about Rambus around the time of the FTC ID release if I remember correctly. Apparently he has taken Bert McComas' place as the mouthpiece for the infringers.
"Hyman looks at it this way:
If Rambus wins its patent suit, every DRAM manufacturer is impacted, not just Micron.
"We don't get into issues that don't affect the competitive balance of the company," Hyman said. "It's not going to dramatically affect Micron's market share."
The bottom line for Hyman, he said, is that he doesn't believe a huge judgment is looming."
No judgment looming... hmmmm.
"Lawsuits over patents are common. And Micron is one of the world's most prolific producers of U.S. patents. In 2003, Micron received more than 1,700 patents; in 2002, it received more than 1,800, ranking third in the nation for patents issued."
Micron the innovator - with all their patents and brainpower, they still haven't figured out a way to produce memory without infringing on Rambus' patents. I also get the feeling this is one of those... look at all the patents we have and you don't see us suing everyone like that evil Rambus.
"For three straight years, Micron has been ranked No. 1 in the semiconductor industry for its technological strength, which includes the ability to convert leading-edge technology into intellectual property."
And yet these clowns can't figure out how to make a profit. Samsung, who pays Rambus (albeit a nominal amount) is far more profitable.
"There are some real concerns because there's an ever-increasing number of (patent) cases and there's a trend toward going after major manufacturers, particularly in the U.S.," said Lewis. "It makes it difficult to be a manufacturer here. We could be an IP company and have someone in China manufacture for us. These trends ultimately are making it more difficult for U.S. manufacturing companies."
Ahhh... the meat of the article. I have no doubt when Micron plead their case to the DOJ and FTC, this is the rationale they used to garner government protection. They whined about Hynix dumping and now they're whining that they are having trouble running their business when they have to deal with these "IP companies". I would love to see them make good on this threat - we'll see how long they last when they don't have Uncle Sam to protect them and play favorites. If their own massive IP portfolio was worth anything, they'd be suing. Hell, look at this staff...
"Micron employs 23 attorneys full time at its corporate headquarters in Boise and routinely works with "a number of large national law firms" and legal experts in other countries, said Lewis."
"Micron's last quarterly statement to the SEC, filed in June, said the firm reported it had $110 million in "other liabilities," a category where firms tally up probable pending charges, often including legal liabilities. That "other liabilities" category has steadily grown on Micron's balance sheet over the years. It was $89 million a year ago."
If I had my way, they'd need more than that.
"Micron hasn't been shy about using the law to its own advantage. The firm historically has been aggressive about trade issues, and last year won a case against competitor Hynix Semiconductor, resulting in the South Korean firm paying millions of dollars in tariffs on goods shipped into the United States. Under U.S. law, Micron receives those tariffs.
"Years ago, we first brought a dumping case against some Japanese companies, and then after that brought similar cases against Taiwan and Korea," said Lewis.
Micron, which has operations in Japan, recently petitioned the Japanese government to investigate imposing tariffs on Hynix there. That investigation was launched this year. "Historically, these cases have brought us significant benefit," said Lewis."
Ha - they're still going after Hynix - now in Japan.
What can we take away from this: Micron is a weasel and will rat out Infineon and Hynix if they think it will gain them a competitive advantage, but at the same time they will be looking for major concessions from Rambus - like no back payment, .75% on SDRAM and 1.5% on DDR and a license to DDR2 and XDR no doubt. No legal fees and having Micron removed from the civil case. This is pure speculation on my part, but I doubt I'm too far off. In return, Micron will spill their guts and remove their complaint at the FTC. Will Rambus byte? I don't know.
I also wonder how a sweetheart deal would affect the relationship with Sammy and Elpida - I would think they would demand the same deal.
As you said Threejack - a lot of articles recently and all very on topic concerning Rambus - Richmond Times article, the EE article, and now this article. I'm guessing there is a lot going on behind the scenes as the DOJ wraps things up. I'm thinking the next 5 months will be pivotal.
"SJ decisions pending in the Hynix trial"
What is taking Whyte so long? Is he trying to hold out until VA2 takes place or now holding out until the CAFC chimes in (or declines to)?
Someone, I think it was Danforth, talked about Whyte and how he was a very deliberate and thorough judge, but it's been 5 months by my count and still nothing out of California. With the following schedule, you would think that Whyte would have to rule on the JMOLs soon.
STIPULATION and ORDER by Judge Ronald M. Whyte :
Deadline to file motions to compel 10/5/04, Deadline for
all motion filings is 10/22/04 ; All motions will be heard
by 9:00 12/3/04 ; Discovery cutoff set for 10/15/04 ;
Pretrial conference set for 2:00 1/13/05 ; Jury trial will
be held 1:30 1/24/05 ; cutoff date for expert discovery is
10/15/04 ; pre-trial filings due by <date not set> ; (cc:
all counsel) [5:00-cv-20905] (dhm) [Entry date 06/25/04]
I'm near positive now that the Hynix trial will begin before the Virginia trial which I view as a positive. I think the chances of getting a jury verdict of guilty on infringement in CA is a lot better and I would think that that would be the trigger for Samsung and Elpida to pay full royalties. If however, VA2 took place first and Rambus didn't get an enforceable infringement verdict, it would muddy the waters even with a victory in CA.
If the En Banc review is denied, Infineon will request and be granted time to begin discovery of those 4000 documents. The trial will be delayed. If the review is granted and/or the second Writ is granted, Infineon will request and be granted time to change their strategy/defenses.
Erach Desai should be happy that Rambus is holding out - it makes his sentiment change to hold/sell from buy seem intelligent.
Threejack - it might be worth reminding people on the Yahoo board that there is a free alternative to the message board political wasteland. IDCC has an excellent and active board on IHUB. I'd like to see the same here (I think the excellent part is already in place) and then you could screen out detractors with OT posts.
JMSO
Threejack - you didn't highlight Mr. Warmke's quote from the article so I'm pulling it out...
"We're seeing a lot of success with companies adopting our technology for PCI Express applications, said Rich Warmke, product director for Rambus (Los Altos, Calif.). "One of the biggest applications for PCI Express is connecting a board bridge to a graphics chip."
"Believe the purpose of this warning from Mr. Danforth is to give the litigant MMs a chance to avoid the AT suit by settling their infringement lawsuits."
I did kind of get the feeling the story was "planted". If Micron is fairly certain that they don't face any penalties, then the DOJ must be dotting i's and crossing t's on their investigation.
I have some leaps and some short term puts - I might add some short term calls today. To me the CAFC decisions could mean a 30% or better price swing in the stock in the short term.
Good article found by mikekato at Yahoo.
Emphasis mine.
http://www.reed-electronics.com/eb-mag/article/CA447594?industryid=2117
Rambus' trials continue
IP company brings another lawsuit, and fresh evidence, against DRAM makers
Tam Harbert -- Electronic Business, 9/1/2004
Sometimes it seems that Rambus will never get out of court.
In a move that seems designed to pressure DRAM makers to settle ongoing litigation with the company, Rambus filed an antitrust lawsuit in May against Hynix Semiconductor, Micron Technology, Infineon Technologies and Siemens. The suit, which seeks at least $1 billion in damages, alleges that the DRAM companies engaged in a "concerted and unlawful effort to eliminate competition and stifle innovation in the market for computer memory technology and computer memory chips," according to Rambus.
It's no coincidence that those DRAM makers are the very companies Rambus is fighting in court for allegedly violating Rambus patents. "It is important to recognize that, by and large, the defendants named [in the antitrust suit] are the ones that are in litigation with us," says John Danforth, Rambus' general counsel. "You can almost look at it as an alternative way for us to be compensated for all this litigation as well as for our innovations."
Rambus has been fighting in the courts with Infineon, Hynix and Micron for four years. Rambus claims that the DRAM vendors owe it licensing fees, because they are selling chips that use Rambus' patents. But the DRAM vendors claim that Rambus' patents aren't valid, because Rambus allegedly broke the rules of the group that sets memory chip standards, the JEDEC Solid State Technology Association. Meanwhile, in 2002, the Federal Trade Commission charged Rambus with violating the antitrust laws by allegedly deceiving JEDEC. An administrative law judge dismissed that case in February 2004, saying that the FTC lawyers had not proved the charges. Those lawyers have filed an appeal, and a hearing is set for September 21 in Washington, D.C.
Ironically, the 300-page decision issued by the judge was chock full of memos, e-mails and conversation transcripts from DRAM company executives. The disclosure of this evidence gave Rambus the ammunition for its antitrust suit. In one e-mail, for example, a DRAM executive urged other DRAM makers to "educate others and get their agreement to say 'no to Rambus and no to Intel domination.'" Other memos and e-mails talk about the DRAM vendors' sharing information about production plans and discuss the need to "manage price competition, profitability."
"This evidence just fell into their lap," says Steve Cullen, a longtime DRAM analyst who now runs his own consulting business. "The Rambus lawyers looked at the FTC decision and said, 'Wait a minute, who is the bad guy here?'"
"We felt that this evidence was just too hard to ignore," says Danforth. "This was pretty bad behavior." The company believes that it was its fiduciary duty to its shareholders to file the lawsuit, he says.
However, it is more than a little convenient that the Department of Justice has been conducting an investigation since 2002 into possible price fixing among DRAM makers. That, combined with Rambus' antitrust suit, might just put enough pressure on the DRAM companies to settle the litigation with Rambus.
By filing the antitrust suit, Rambus has raised the level of risk for the DRAM makers, says an industry insider who has followed the cases closely. First of all, one judge will hear the antitrust case against all three companies, and the case will be heard in California, where the judge may be friendlier to Rambus than some of the judges in the individual lawsuits. Second, the evidence from the FTC case is so strong that this industry insider believes that the DRAM companies will be found guilty. "It's almost a foregone conclusion, with the only variables being compensation for damages," he says. And third, if the companies are found guilty in the antitrust case and if they are found to have knowingly infringed on Rambus patents, they can be fined treble damages plus punitive damages. This may amount to well over $3 billion.
Recent developments have bolstered the possibility of a settlement. In July Infineon increased its reserve by $260 million to cover potential liability from antitrust probes and related lawsuits. The provision pushed the company into a loss for its third quarter. There have also been indications that the DOJ investigation may be coming to a head. A former Micron sales manager has agreed to plead guilty to obstructing the DOJ investigation and is now cooperating with the DOJ, according to The Wall Street Journal, which cites its source as a January 21 plea agreement. The Journal also reported that Micron has sought amnesty from criminal prosecution and in exchange is expected to admit to a role in the alleged conspiracy and to cooperate with the DOJ investigation. (A Micron spokesman does not confirm or deny the Journal report but points out that the company has said that it is cooperating fully with the DOJ and that the company "does not expect a penalty or a fine in association with the DOJ investigation.")
In addition, Rambus is still hoping that the government will give it evidence. The company wants access to some 2.5 million documents that the DOJ has been collecting during its two-year investigation. However, those documents aren't yet available. At the request of the DOJ, a federal judge has issued a six-month stay on the disclosure of relevant documents. This means that parties in private lawsuits won't be able to use these documents in the discovery phase of their trials until January.
So the antitrust lawsuit is likely to drag on for a long time. Plus the San Francisco docket, where the antitrust case was filed, moves rather slowly, according to Alan Smith, a patent lawyer and principal at Fish & Richardson. He estimates that it could be two years before the case comes to trial. Meanwhile, further twists may come from Rambus, the DRAM makers, the FTC or the DOJ. "It's like a poker game, and the stakes keep getting raised," says Smith.
Micron - they don't expect any penalties from the DOJ and from their last 10Q, I don't believe they've reserved any funds whatsoever which suggests to me that they don't expect the DOJ case to require any allowances for Rambus.
JMS(Skeptical)O