Rambus Can't Patent a Growth Story

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It wasn't a great 2011 for Rambus (Nasdaq: RMBS  ) , and its latest earnings only confirmed the trend. Quarterly revenue dropped on both a sequential and year-over-year basis. Although annual revenue of $312.4 million was a beat in CEO Harold Hughes' eyes, it represented a slump from 2010. Rambus recognized significant settlement income that year, but even without that windfall the company still would have brought in more than it did through 2011.

Recovery mode
Rambus swung back to red ink in 2011, staining its 2010 success as a potential one-hit wonder. It was a steep slump, with three times the loss per share that analysts had anticipated for the year. Rambus did net an annual profit of $46.3 million under the non-GAAP measures it prefers, but that too was significantly lower than 2010's $165.7 million profit.

Investors seemed rather sanguine after hearing the news, with shares trading just (air quotes) 7% lower after hours. Since the stock already lost over half its value in one session late last year, much of the dour expectation was probably already priced in. Rambus shares are now worth almost exactly what they were three years ago.

Turnarounds are hard work
Hughes touted license agreements with Freescale Semiconductor (NYSE: FSL  ) and Broadcom (NYSE: BRCM  ) , as well as reups with Panasonic and Toshiba. The Freescale and Broadcom deals help put to rest a major patent suit, but investors will have to wait to feel the impact -- revenue for the upcoming quarter is projected to be about $20 million lower than it was for the current one.

Rambus made several strategic acquisitions last year to broaden its technology portfolio, and is also branching out into LED lighting with General Electric (NYSE: GE  ) . That should help the company recover, but future gains are far from assured. Fellow tech-patent licensor InterDigital (Nasdaq: IDCC  ) is also in the dumps after failing to rustle up some big new deals, casting a dark cloud over the patent-license model.

Can Rambus slide around, or are the golden days of patent royalties over? The next few quarters will be telling, if investors can stomach the wait. But if you don't want to wait to find a company that can cash in no matter whose technology is running the show, check out this free report. In it, you'll find everything you need to know about the rise of data analytics and the one company offering the best solutions for businesses around the world. There's no patent on this information, it's free -- but it won't be available for long. Click here for your copy.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter for more news and insights. Motley Fool newsletter services have recommended buying shares of InterDigital. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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