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Stock Analyst Update

Litigation Still the Key Issue for Rambus

Solid results are encouraging, but not the be-all end-all.


What Happened?
Rambus (RMBS) reported fiscal first-quarter results Thursday evening. The designer of semiconductor intellectual property announced earnings of $13 million on sales of $35 million. On a per-share basis, earnings of $0.12 fell a penny short of the First Call consensus; a higher-than-expected tax rate was the culprit.

What It Means for Investors
The beauty of Rambus' business model is evident in these quarterly results. On just $35 million in sales, the firm generated roughly $20 million in operating income--an operating margin of almost 60%. Had it not been for a higher-than-expected tax rate (which is not a concern to us), Rambus' earnings would have met Wall Street estimates.

Jeremy Lopez does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.