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Wednesday, November 15, 2006

Watch Out for Rambus Headlines Today

Stock Ticker: RMBS

We have a dual situation in Rambus (RMBS) today. The company is presenting at the UBS Global Communications and Technology Conference at 11:30 a.m. Eastern Time this morning and it has Federal Trade Commission oral hearings today at 2:00 PM EST.

This UBS Global Communications and Technology Conference event will be available through a webcast and can be accessed at Rambus' Investor Relations web site at http://investor.rambus.com/.

In another event, the Federal Trade Commission is meeting to consider oral arguments in the Rambus case. This meeting is set to adjourn to a closed session after the open session. The time is for 2;15 PM EST today and will be held at the FTC building at 600 Pennsylvania Ave. in Washington, D.C. The matters to be considered are two-fold in that oen is public and one is private. Portion Open to the Public: (1) Oral Argument in Rambus Incorporated, Docket 9302. Portion Closed to the Public: (2) Executive Session to follow Oral Argument in Rambus Incorporated, Docket 9302.

Please keep in mind that these hearings and public sections can change without notice, so there is always a shot that nothing will be mentioned at all on newswires today.

SYNOPSIS

While certain court cases have gone in Rambus' favor, the FTC is the body that has ruled against Rambus over it having created a monopoly by deceiving a standards-setting committee years ago. If the FTC stays on the anti-Rambus stance, then it could potentially create an environment that Rambus may have to pay back some of the back-royalties it collected and it could thwart many such royalty payments in the future.

Any adverse stance if you take it three steps further could be deemed by the street as a threat to the Rambus business model. Since Rambus does NOT manufacture chips and sell them on their own and since they are 100% reliant on negotiated royalties for use of their chip design, this is essentially just a royalty company that collects fees for using their designs. It would also give any defendant or plaintiff on the other side of Rambus a real leg to stand in future court cases.

While we have laid out the potential worst case scenario, it should be taken not as a prediction. In reality these cases tend to create a cap or a more stable royalty payment scenario rather than an outright elimination. With certain agreements in place it is now cheaper for certain patent and design licensees to just pay than it is to go in and risk punitive damages by refusing to abide by agreements and going to court to overturn an already-signed contract.

Since traders tend to shoot first and ask question later, if the bother, you could see some sudden moves in either direction today and not know why the stock moved. That is just another day in the market. As a reminder, RMBS stock options expire Friday (11/17/06) with the rest of the stock option expirations in US-traded public stocks. The company also already noted on Monday that it does not expect to file its quarterly results on time as it investigates stock options granting.

Jon C. Ogg
November 15, 2006
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