2005 Annual Report
I know the 10-k has been available online for a while now, but I finally received my hard copy in the mail and just finished scanning it.
A few notes:
XDR DRAM has been selected for a number of as yet unannounced consumer electronic applications. These are still a mystery I believe.
For the twelve months ended December 31, 2005, revenues from Intel, Elpida, Toshiba, and Matsushita (Panasonic) each accounted for greater than 10% of our total revenues. In 2004, only Intel, Elpida, and Toshiba accounted for greater than 10%. I find this very interesting - two noticable absences to me: Sony and Samsung - for 2005 I understand no Samsung, but not in 2004 either? It's a reminder how important and faithful Elpida and Toshiba have been as well as Matsushita. Is it just coincidence that the Japanese recognize and appreciate the value of Rambus technology while the Koreans and the chumps from Idaho would rather litigate?
LOLO - you had opined on the most recent quarterly option expense and the effect of the volatility of the common stock which was spot on. Rambus uses the Black Scholes method to estimate the fair value of the share-based payments to employees. Black Scholes is heavily influenced by volatility of the stock price - Rambus has been very volatile this year (positively) rising almost 4 fold so it is not surprising that the expense for this quarter was so high. It is a very important reminder of the impact of stock options however.
A couple things on stock options - currently there are 26,027,517 stock options outstanding of which only about 2 million are currently underwater. The implication is that you have about 24% of potential dilution - this is huge - it's the difference between Rambus being worth 100 a share and 76 a share. Again, this is spilt milk but it's something investors should consider when attempting to value the company.
Related to this, about 2.1 million net options were granted in 2005. The good news is that the 6 most highly paid executives received only 250,000 of these all of which went to Harry.
Those 6 mostly highly compensated executives are: Harry, Geoff, Laura Stark (what does she do again????), Bob Eulau, John Danforth (damn lawyers :>), and Kevin Donnelly.
On this year's proxy, Rambus is proposing setting aside 8.4 million shares for issuance which they think will be enough for 2 years. I damn well hope so - that's potentially another 4% dilution a year. The incentive plan would include the following: stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other stock or cash awards.
Not bad.
AI
