UPDATE 2-No verdict in Rambus case but shares plunge
Thu Apr 20, 2006 7:28 PM ET
(Updates with options activity, share price, details)
SAN FRANCISCO, April 20 (Reuters) - Rambus Inc. (RMBS.O: Quote, Profile, Research) said on Thursday there had been no verdict yet in its closely watched patent infringement case against South Korea's Hynix Semiconductor (000660.KS: Quote, Profile, Research).
"Currently, the jury is still deliberating," Rambus spokeswoman Linda Ashmore said at around noon in San Jose, where the case is being tried. The jury later adjourned for the day with no verdict.
Ashmore spoke shortly after Rambus' stock suddenly plunged as low as 20 percent in late-afternoon Nasdaq trading. The shares pared losses slightly to close down $8.10, or 17.4 percent, at $38.50 on Nasdaq.
"There have been all kinds of rumors that Rambus lost their court case. Nobody has confirmed that and so the stock is coming back," said William Lefkowitz, options strategist at brokerage firm vFinance Investments.
Rambus shares bounced back somewhat in extended trading, rising 6.1 percent to $40.85 on the Inet electronic exchange.
Rambus options activity has been active this week ahead of the company's earnings -- reported on Wednesday -- as well the anticipated outcome of the jury's verdict, traders said.
"Even after the earnings came out after the close on Wednesday which would normally dampen Rambus' options volatility, the demand for both puts and call remained very high due to the uncertainty surrounding the court case," said Scott Sheridan, co-founder of Chicago-based online brokerage thinkorswim.
A total of 151,897 calls and 91,528 puts changed hands in Rambus in the U.S. options market on Thursday, far above Wednesday's total of 65,370 contracts, according to market research firm Track Data.
"Rambus April option prices are whipping aggressively" as the stock sells off and then goes up, said Paul Foster, strategist at financial-data Web site theflyonthewall.com.
Earlier this week, some investors bought near-term options on speculation that a court decision would occur between now and the monthly expiration of April on Friday after the close, Lefkowitz said.
With the jury not expected to resume deliberations until Monday, traders said the uncertainty will probably spill over into next week.
The case, which went to trial a month ago after six years of legal wrangling, is being closely watched in the $20 billion-a-year market for computer memory chips known as DRAM, or dynamic random access memory.
Rambus shares have more than doubled this year on expectations that the jury will find that Hynix did infringe its patents. If so, the jury could order Hynix to pay hundreds of millions of dollars in damages.
The case is being tried in the U.S. District Court for Northern California in San Jose. (Additional reporting by Doris Frankel in Chicago)
