Rambus, like Qualcom in the wireless arena, is a favorite stock of tech watchers, as their innovation and IP licenses have driven their revenues and free cash flow (FCF) starting with Nintendo64’s adoption of their RDRAM® memory interface. Zacks recently reported the renewal of Rambus’ 5-year DRAM licensing deal with Toshiba. (This follows individual announcements of deals with Panasonic, Renesas, Elpida, Samsung, etc.) The report is typical of press releases that generally emanate from a company’s Investor Relations Department. These stripped-down PRs by themselves tend to lift stock prices; they don’t need details to work their magic. But as more than one blogger suggested, it would be nice to know the actual value of the deal.
First of all, licensing is front and center at Rambus as the free cash flow thrown off by licensing is renewable. (See here for a discussion of Rambus’ FCF.) Their patent portfolio in semiconductors is strong, and they are now investing in lighting technology. A prototype license agreement is available on the Rambus site.
Though the Toshiba deal is brand new and unavailable, readers will be interested in seeing what Rambus is willing to settle for in similar contracts; a brief search in ktMine produced a five-year license executed mid-2010 with NVIDIA (Rambus NVIDIA) that spells out the details. (ktMine is rapidly becoming the source of choice for full text of licenses with non-redacted royalty rate information for valuators, PE firms and M&A types to whom the details behind the press releases are important.)
Rambus’ IP strategy now clearly includes aggressively protecting their portfolio as well, as we see in their action against IBM (really against prior decisions of the USPTO).