Rambus, Broadcom, Cirrus exceed estimates
Rambus Inc. (Nasdaq: RMBS) said Wednesday fourth quarter income was 9 cents a share. Revenues improved as the company added a royalty-based stream to its financial model, but costs may rise going forward as the company continues a legal battle to maintain its intellectual property.
Shares in the developer and licenser of high-bandwidth chip technologies closed up 0.94 to 58.75.
Net income on a pro forma basis was $10.2 million, or 9 cents a diluted share, better than First Call's expected profit of 6 cents a share. Income was also up 285 percent from the same period last year and up 115 percent from the previous quarter. Results excluded acquisition-related costs, one-time employee compensation expenses and a one-time tax adjustment. On the same basis, pro forma net income for 2000 was $21.5 million, or 20 cents a share, up 147 percent over fiscal 1999.
Income, excluding one-time costs, was $14.5 million, compared to $3.4 million in the same period last year and $6.0 million in the previous quarter. Operating income for the fiscal year was $28.4 million, compared to $9.5 million in fiscal 1999.
Revenue was $26.9 million, up 119 percent over the same period last year and up 52 percent from the previous quarter. For the full fiscal year, revenue was $72.3 million, up 67 percent over last year's.
Included in fourth quarter results was $19.9 million in royalties, more than three times the amount reported in the previous quarter. Royalties for the fiscal year were $32.6 million, more than four times the amount recorded in fiscal 1999.
Contract revenue for the fourth fiscal quarter was $7.0 million, down $4.2 million from the previous quarter. The previous quarter results included approximately $3.7 million of deferred revenue due to the cancellation of contracts of licensees who are reducing their activities in the DRAM market. No such revenue from contract cancellations was recognized in the fourth quarter. For the fiscal year, contract revenue was $39.7 million, up 12 percent from fiscal 1999.
The company said operating margins exceeded 50 percent for the first time thanks to the impact of receiving royalties--from the sale of both RDRAM-compatible and SDRAM-compatible ICs--on its financial model. However, near-term earnings growth will depend on the ramps of the Sony PlayStation2 into the U.S. and the Intel Pentium 4, the relative price of RDRAMs to SDRAMs and the timing of licensees for the use of its IP in SDRAM-compatible Ics, the company cautioned.
Officials said the company is confident in its long term outlook, as its patent position is strong. But it anticipates increased costs in the near term due to legal defense of its IP and a move to larger facilities.
Rambus also said it will likely be able to take advantage of its deferred tax assets and therefore booked a $38 million credit to income tax expense in the fourth quarter to eliminate a partial valuation allowance against the deferred tax assets.
Among other technology companies reporting earnings Wednesday:
Analysts were expecting a profit of 24 cents a share.
Ahead of the earnings report, Broadcom shares fell $14.88 to $209.38.
The $319.2 million in sales marks a 129 percent jump from the year-ago quarter when it earned $28.7 million, or 12 cents a share, on sales of $139.6 million.
"The 30 percent sequential revenue increase we experienced this quarter was the result of continued strong momentum in the broadband markets we serve," said Henry Nicholas III in a prepared release.
Including acquisition-related charges and payroll taxes, Broadcom lost $19.4 million, or a 9 cents a share, in the quarter.
Broadcom shares moved up to a 52-week high of $274.75 in August after slipping to a low of $54.25 last October.
Nineteen of the 20 analysts following the stock maintain either a "buy" or "strong buy" recommendation.
The chip equipment maker said on a proforma basis, excluding investment gains, restructuring credits and other items, it earned $16.1 million, or 23 cents per share, in the three months ended Sept. 23. That compares with a loss of $735,000, or 1 cent per share, a year earlier.
Wall Street analysts on average had been expecting Cirrus to report a profit of 18 cents per share, according to First Call.
Including one-time items in both years, Cirrus's net income totalled $16.5 million, or 23 cents per share, compared with a loss of $9.4 million, or 15 cents per share, a year earlier.
Given the strong results, Cirrus said it now expects third-quarter pro forma earnings per share of 25 cents to 27 cents, compared with a First Call expectation of 21 cents, and proforma earnings per share for fiscal 2001 of 90 cents to 94 cents, which compares with a First Call estimate of 77 cents.
The chip maker reported third quarter earnings of $33.2 million, or 19 cents per share, excluding special charges. First Call consensus predicted a profit of 17 cents per share.
Including amortization, On earned $29.9 million, or 17 cents per share.
Product revenues in the fourth quarter increased 28 percent year-over-year and 2 percent sequentially to $539 million. Analog sales rose 79 percent year-over-year, logic revenue improved 25 percent and discrete products revenue gained 11 percent.
The maker of chips for optical network equipment and storage networking reported fiscal fourth quarter net income of $40.3 million, or 21 cents per share, excluding amortization. First Call consensus called for a profit of 19 cents per share.
Including amortization, Vitesse earned $11.6 million, or 6 cents per share.
Fourth quarter revenue increased 71 percent year-over-year to $138 million.
For the full fiscal 2000, Vitesse earned $126.3 million, or 67 cents per share, excluding special charges, on revenue of $441.7 million.
-- Sergio G. Non contributed to this report.