W.R Hambrecht on Rambus
POSITIVE ANALYST DAY AND DOCUMENTS RELEASED IN ANTITRUST PRICE FIXING CASE SUPPORT RAMBUS; REITERATE BUY RATING
Yesterday, Rambus, Inc. hosted its analyst day and overall, we came away positively impressed with the near-term outlook of its litigation front on the antitrust price fixing case against DRAM manufacturers Samsung, Hynix, and Micron and on the long-term viability of its IP business model. The company provided a litigation update, product and IP overview, and reiterated its previous outlook for Q2. Following the issues of the last number of weeks, we believe that at the Analyst Day management restored investor confidence in the company. In addition, as we anticipated in our May 22nd note, documents in the price fixing case were released that were very favorable for Rambus. We continue to believe that despite the 18.5% move in the stock yesterday that at these levels, it is oversold, and we continue to recommend that investors build positions in Rambus. We see a number of upcoming positive catalysts: 1) Judge Whyte is likely to dismiss Hynix claims in the next few weeks for a JEDEC trial in August as part of phase 3 of the Hynix trial; 2) Rambus is to have a June 27th hearing in Judge Whyte's courthouse with regards to a request to accumulate interest on the +$300M damage reward Rambus was granted from Hynix; 3) potential further positive developments in the price fixing case which would further strengthen Rambus position against the DRAM makers. In the long term, the company continues to command a strong IP business model with the potential of collecting hundreds of millions of dollars in damages and future royalties on the heels of the successful Hynix trial and positive outcome in the price fixing case.
