There should be no doubt in anybody's mind anymore that data storage and handling will play a large part in the next few years of the IT sector's history. In particular, memory-based storage systems are poised to revolutionize several industries at once.
So how come memory technologist Rambus
One way to get an inkling of what's going on is to look at earnings reports, such as the third-quarter results Rambus published last night. Revenue was down 18% sequentially but up 14% year-over-year to $31.7 million, the differences fueled by unpredictable patent licensing negotiations that work for the company in some cases and against in others.
Right now, for example, Rambus had hoped to close deals with customers including Toshiba, Renesas, and Elpida before the end of the quarter, but the negotiations are dragging on. That results in slow sales this time around, but those contracts should eventually get their John Hancocks and trigger catch-up payments to make up for the missed revenues. That lumpy and unpredictable operating model, whereby Rambus generates the vast majority of its revenue, is one reason for the company's jumpy performance history.
For another, Rambus spends a lot of time in the courtroom, to the extent that the earnings call often sounds like an episode of L.A. Law or something. Last quarter, Rambus won a major case against graphics chip designer NVIDIA
Some analysts expected that outcome to act as leverage when Rambus renegotiates royalty rates with the other major graphics expert, Advanced Micro Devices
So you see how this works: Rambus relies on a series of unpredictable systems working out in its favor, from lawsuits to favorable contract negotiations. When all goes to plan, the stock goes up; if not, there's a big drop. Either way, the timing of all this is impossible to predict. Serious investors may be happier elsewhere, leaving Rambus to the gamblers and the armchair lawyers.