DJ UPDATE: Rambus Dn; May Restate Fincls On Options Grants
Dow Jones Real-Time News for Investors
2:40 p.m. 06/28/2006
NEW YORK (Dow Jones)--Shares of Rambus Technology Inc. (RMBS) fell 12% Wednesday after the developer of computer-memory technology disclosed late Tuesday that improperly dated stock-option grants may lead to a restatement of prior financial results.
Rambus, Los Altos, Calif., said it may need to book noncash charges and restate results for prior periods because of possible discrepancies between actual and recorded dates for stock-option grants. Any stock-based compensation charges would decrease reported net income or widen net loss, the company warned.
Shares of Rambus recently traded at $20.78, down $2.36, or 10.2%, on volume of 12.8 million, compared with average daily volume of 5.8 million.
"The reaction is probably...a little too extreme considering that we still don't have the information, and we don't know whether they are restating one year or five years," said WR Hambrecht & Co. analyst Daniel Amir, who doesn't own any shares or have any banking conflicts and rates the issue a "buy."
Amir noted that - unlike at some other companies tainted by stock-option timing investigations - there would almost certainly not be senior management upheaval at Rambus, because the chief executive was appointed only about eighteen months ago and the chief financial officer arrived in April.
For Rambus' business outlook, Amir said a settlement with Hynix Semiconductor (000660.SE) over a patent dispute looked likely. Such an outcome would help the company's case with other major makers of memory chips. Rambus holds a wide range of patents for engineering advances it has pioneered for memory chips and other technology and makes money by licensing technology to manufacturers.
The Wall Street Journal reported that the wording of Rambus' stock-option announcement and the indication of possible accounting charges suggests the options were timed in a way that benefited insiders by giving them a lower exercise price. If the grants were backdated to a day when the company's stock price was lower, that would make them more valuable to the recipients.
In late May, Rambus said its board-audit committee commenced an internal probe into the timing of past option grants. The committee said it would focus primarily on options issued in or before 2003.
A wide range of companies have been caught in the dragnet of stock-option backdating investigations. Late Tuesday, for example, several companies announced federal inquiries into options practices.
Among those companies, semiconductor company Applied Micro Circuits Inc. (AMCC) stock recently traded down 6.5% at $2.44; Internet concern CNET Networks (CNET) fell 4.5% to $8.15.
-By Rob Curran, Dow Jones Newswires; 201-938-5176; robert.curran@dowjones.com
