Final Event Transcript of RMBS conference call, 14-Apr-03 4:30pm
2003-04-14 22:58 (New York)

Q2 2003 Rambus Inc. Earnings Conference Call

Boston, Apr 14, 2003 (CCBN StreetEvents) -- Event Transcript of Rambus Inc. conference call, 14-Apr-03 4:30pm ET.

ROBERT EULAU, SR. VP & CFO, RAMBUS INC.: Good afternoon and welcome to the quarterly conference call from Rambus, Inc.. This will cover the results from our second fiscal quarter and fiscal year 2003. My name is Bob Eulau and I am Rambus's Chief Financial Officer. Dave Mooring, our President and John Danforth, our General Counsel, are joining me today. I'll start with a summary analysis of the financial results of the quarter and turn it over to Dave for the business progress we have made in the last quarter. We will then open the lines for Q&A. John, Dave and I will all be available for questions at that point in time. The press release has been filed with the SEC on form 8-K. It's available on our website at www.rambus.com. A replay of this conference call will be available for the next week at 1-800-642-1687. In addition, we are simultaneously webcasting this call and can be accessed on our website for one week, beginning at 5 PM pacific daylight time.

Before we begin, I need to state that our discussion will contain forward-looking statements regarding the company's financial prospects, pending litigation, development plans, anticipated product shipment dates, relations with licensees and other third parties and matters and actual results may differ materially. Among the reasons which could cause actual results to differ materially is the possibility of inadequate shipments of RDRAM memory devices and controllers for the Sony Playstation II and the PC main memory market. The market you responds to these products. Any deterioration in the DRAM market, including declining prices, any delay in the development of Rambus-based products by licensees. Any delay in the development of shipment of new Rambus products, a greater than expected response in the market to competing technology. A lack of progress on price and cost reduction by RDRAM suppliers, inadequate progress in finding new contracts for RDRAM, Yellowstone, SDRAM, or DDR memory devices and controllers, inadequate progress on signing new contracts for RaSer and Redwood interfaces, current licensees not fulfilling their contract obligations, unexpected delays in completing contract requirements, current licensees terminating their contracts, adverse litigation decisions and other factors available on our SEC filings including 10-Ks and 10-Qs.

Overall we are pleased with the progress the company has made this quarter. We have made important strides forward with both the business and litigation. This quarter represents the first quarter where redwood and Yellowstone represent a material portion of our revenue. These new technologies were the catalysts for year-over-over revenue growth. Earnings per share was 5 cents. This was the net result of several factors in addition to the revenue growth I just mentioned. During the quarter we made important new investments in the litigation and R&D areas, and we also experienced a one-time after tax gain of $800,000 after the R&D expense we recognized associated with the divesture of our original investment in Neurologic Design Incorporated.

Now for a bit more detail on revenue. Total revenue for the quarter was $28.1 million, up 19% over the same quarter last year and up 9% sequential. Total royalties for the quarter were $24.8 million up 14% from the same period last year and up 2% relative to last quarter. Please remember that this quarter's royalties reflect shipments that occurred in the fourth calendar quarter of 2002. RDRAM royalties were consistent with the seasonal patterns we expected for both the memory device and memory controller standpoint. Overall RDRAM royalties were down 1% from the last quarter. SDRAM and DDR royalties were up sequentially about 4% for memory devices and controllers combined. This was on the high end of our expectations. This sequential increase was driven by very strong shipments of DDR memory and SDRAM memory controllers. To help with scenario planning, the revenue specifically coming from SDRAM and DDR memory and memory controller royalties comprises about 35% of the revenue for the quarter that ended in March.

Contract revenue in the second physical quarter of 2003 was $3.3 million which is up 90% from the same period last year and up 137% from last quarter. This increase in contract revenue reflects the first material revenue we are recognizing for Yellowstone and Redwood. We received about $13.8 million in cash on contract payments this quarter. Spending for the March quarter was $23.6 million. This was up $4.7 million or 25% from the previous quarter. This is up $8.8 million or 59% from the same quarter a year ago. The major change in spending was due to an increase in litigation costs, an increase in research and development and an increase in cost of contract revenue. Cost of litigation was up $2.6 million from last quarter and $7.1 million and up $5.4 million when compared to the same quarter last year. The litigation costs were high primarily due to the FCC case going to try trial on April 30th and generated higher than expected costs from the discovery document production and motion practice in that case.

Operating expenses, excluding costs of litigation, were up 15% compared to last quarter and up 24% when compared with the March quarter last year. With the increase largely attributable to the planned ramp-up to Yellowstone and Redwood interface products. This quarter we were able to sell our positions in Neurologic to Artisan Components in exchange for our shares we received cash of $2 billion, Artisan stock valued at $2.5 million at the date of the sale, and $500,000 in intellectual property licenses. In aggregate, we recovered about 99% of our original investment. The Artisan stock was sold the first week in April. Based on the Neurologic transaction, we recognized other income of $1.7 million and R&D expenses of $500,000.

From a profitability standpoint this was another good quarter. Net income for the second quarter was $5.1 million or 18% of revenue. Compared to $5.5 million in the previous quarter and $6.7 million in the same quarter last year. This profitability led to strong cash flow for the quarter. Our cash, cash equivalents, marketable securities and restrictive investments during the second fiscal quarter were $183 million versus $188 million last quarter and $169 million as of September 2002. The main reason that this number is down $5 million from last quarter is that we invested almost $15 million in repurchase in shares of our common stock.

The share repurchase program is an ongoing long-term program. Repurchases for the March quarter totaled $1.4 million at a cost of $14.7 million. Our average price for the quarter was $10.19. We have remaining authorization from the board to repurchase an additional 4.7 million shares over an undetermined amount of time. Volumes of purchases will vary by quarter based on the opportunity. At the end of this quarter we had average basic shares outstanding of $97 million and diluted shares outstanding of $104 million.

Now give you guidance on what to expect in the third quarter of 2003. This guidance obviously has a lot of uncertainty associated with it. This guidance reflects our best guess at this point in time, and our actual results could differ materially from what I am about to review. We estimate revenue will be between $27-29 million. In non-litigation operating expenses, we estimate that spending will be between $16-18 million. The increase in spending is primarily driven by increased investments in our Yellowstone and Redwood product areas.

Litigation spending is always difficult to predict because we do not control timelines and requests from the courts, nor actions that our adversaries take to cause us to incur more expense. Based on what we know today, we believe it is likely that litigation spending will be between $5-8 million for the third fiscal quarter. This is very dependent on the FCC trial scheduled to begin April 30th and dependent on the schedule for the private litigation. We are estimating net interest and OTHER [correction by rambus.org] income to be between 1.2 and $1.4 million. Finally still estimating a tax rate of 32% for the fiscal year 2003.

Going forward, there's one more change that I want to make you aware of. Rambus has operated internally on a calendar year end for many years while our fiscal year end has been September and our tax year end has been March. Last week our board of directors voted to change our fiscal year end from September 30 to December 31st. This will have no effect on our quarterly reporting since we'll remain on calendar quarters. In time, this will simplify the internal and external financial reporting for the company. On the subject of litigation, I will quickly review major items in our litigation timeline. Let me start with an update in the U.S. We received a favorable initial decision from our [INAUDIBLE] appeal from the U.S. court of appeals for the federal circuit court. I'll call this the CAFC going forward. More recently, we received another favorable ruling from the CAFC which was the denial of both the reconsideration by the panel and denial of [INAUDIBLE] review from the entire CAFC. Infinion has sought and obtained from the CAFC its stay of the issuance of mandate to the Virginia court.

We expect this stay to remain in place until the U.S. Supreme Court decides whether or not to hear the case. We expect to know by October whether or not the Supreme Court will hear the case. Once issued by the CAFC, the mandate would start the process of a retrial of our infringement claims against Infinion in the Virginia court. A favorable outcome of the appellate ruling is that, one, relatively small DRAM company with an interim fixed royalty agreement has reverted back to the original agreement. The interim fixed royalty agreement with another DRAM manufacturer remains in place pending further litigation progress. The next event in the private litigation against Micron is a scheduled hearing on July 7.

In the private litigation against Hynex, discovery is ongoing with a trial date set for November 2004. The other major action is in the U.S. with the Federal Trade Commission. Discovery, which was extensive, has ended in the case and the trial is set to begin on April 30. In ruling today, the FTC administrative law judge denied our motion for summary judgment. We understand a basis for that denial is that he believes there is a triable issue of fact as to whether we improperly used information from the Getex standards body in prosecuting our patents. In the class action lawsuit filed by Holiday Matinee, alleging that DRAM pricing is too high as a result of Rambus royalties, the judge granted a third demur after which the plaintiffs sought to dismiss their own complaint without prejudice and have expressed their attention to appeal. We have moved to have that dismissal be with prejudice. In a Delaware chancery court derivative suit, the judge required plaintiffs to file a motion to amend, seeking leave of the court to amend their complaint in light of the CAFC decision which the plaintiffs did. Rambus believes the new complaint as filed by [INAUDIBLE] has opposed the plaintiff's motion for leave to file it. The plaintiffs in the shareholder suit in northern California are moving to dismiss their case with prejudice as a result of the federal circuit decision.

In Europe, we are waiting for the Mannheim court to schedule the next hearings in Germany, which we anticipate to be late summer or early fall. The anticipated hearing should concern and possibly decide the infringement issues. We are waiting for the expert report in the Hynex matter. But we believe the court will move forward with the infringement proceedings against Micron and Infinion as the expert has provided his report in those matters. We submitted our first round of arguments to the European patent office in our appeal of the validity hearing last fall. Which while confirming the validity of our European patent, required us to add additional language that we don't believe should be required in the claim. A hearing was held in March 2003 at the utility models division of the German patent office, regarding a Rambus utility model that is similar in scope to the European patent at issue in the European patent office. Based on the same reasoning of the European patent office, the German patent office required Rambus to add additional language to the utility model in order to preserve the utility model.

However, in the utility model case, Rambus rejected the particular additional language requested by the German patent office and the utility model was, for this reason, and based on a prior argument, revoked. Rambus plans to appeal the decision, although as a practical matter it has little or no bearing on our future patent rights, as it has limited scope, and in any event, a German utility model has, compared to a patent, a very limited term which has already expired in our case. That covers the key financial and legal issues for the second quarter of fiscal 2003. So now I'll turn it over to Dave for comments on our business.

DAVID MOORING, PRESIDENT & DIRECTOR, RAMBUS INC.: Thanks, Bob. Good afternoon, everyone. 2003 started out well. Rambus reached a number of key milestones this quarter on both the customer and technology fronts. We are executing the mission statement which is to be the preferred provider of chip to chip interface face solutions by partnering with our customers to solve their critical IO problems and enable industry leading products. During the first quarter, we find licensing and partnership agreements in all four product lines including both logic and memory interfaces.

Our first announcement of 2003 was an agreement with Sony, Sony Computer Entertainment and Toshiba for the license of both our Yellowstone and Redwood interface technologies. These will be utilized with the cell processor that is currently under development. IBM has access to both the Yellowstone and Redwood technologies through the development partnership with Sony and Toshiba. This is a very exciting program for us and key proof point that our advanced technologies are ideal for future entertainment platforms and broadband applications.

I'll now cover our four product lines first summarizing the key attributes of our Redwood interface, for those of you who missed its introductory announcement in February. The Redwood interface is very fast, up to 6.4 gigahertz and a parallel bus between logic chips. Typical applications could include processor front side buses, graphics buses or high performance version of standard committee buses such as hypertransport, spy four, or rapid IO. We have designed Redwood to support data rates as low as 400 megahertz, so it could provide backward compatibility to some of these standards. Redwood's biggest value is for leading companies who drive performance who will run the interface in the multiple gigahertz range. This Redwood family of parallel bus interface is optimized for low cost and low latency, but not just for the consumer markets, it's also very relevant in the computer and networking markets.

The other key interface which was part of our announcement with Sony and Toshiba, is our Yellowstone memory interface technology. As you may recall, Yellowstone is targeted at graphics computer and consumer and networking markets. Yellowstone has a data rate starting at 3.2 gigahertz with a roadmap to 6.4 gigahertz and beyond. This enables memory subsystem bandwidth up to a 100 gigabytes per second which is about 25 times the cutting edge of today's PC. Yellowstone utilizes a number of advanced technologies including: differential signaling; optal data rate; and flex phase. To operate in a multigigahertz range, ultimately all DRAMS will migrate to differential signaling and, once again, Rambus is leading the way. Optal data rate means transferring eight bits per clock. If you recall the RDRAM that Rambus introduced in 1992, it was the first DRAM and this was by many years lead to implement double data rate. A decade later we are leading the industry to optal data rate. One thing counterintuitive about Yellowstone is although it's significantly faster than other DRAM interfaces, it is ideal for low cost systems and this is because Yellowstone reduces pin count which leads to a lower system cost and lower controller cost. We will provide more details about Yellowstone in our Japan Rambus forum in July, at that time we anticipate announcing Yellowstone's formal product name.

In addition to the Sony/Toshiba agreement, we recently signed a licensing agreement with Alpida. Alpida is the largest Japanese DRAM supplier, and they will produce their next generation DRAMs using the Rambus Yellowstone interface technology. We are excited to see the attraction Yellowstone is gaining in the market. Also in the first quarter, we made good progress on our serial link business which includes our RaSer family which runs from 1-10 gigabytes per second which runs between logic chips in a serial manner. RaSer is used in applications like back plains, [INAUDIBLE], fiber channel, ethernet and PCI express. During the quarter, we signed several new RaSer licenses bringing the total new number up to 18. One announcement I would like to mention in particular occurred in February when we announced a collaboration and licensing agreement with PLX technology to provide advanced PCI express technology. PCI express is going to be a prevalent interconnect in a wide variety of applications including personal computers. RaSer technology enables 2.5 gigabytes per second, point to point serial interface connections required for PCI express interface products. Also our collaboration with PLX will allow for the development of next generation PCI express standards in the 5-10 gigabit per second range. In addition to our success at licensing current RaSer technology we continue to make progress pushing Frequency Forward. We presented a paper at the prestigious ISSCC conference as well as demonstrated rates at 10 gigabytes per second at the Intel Forum and Design Con.

The fourth and final product I will discuss is the RDRAM which is the oldest and most visible line. RDRAM continues to ship into existing applications, but it is also getting designed into new consumer products and communications equipment. My recent favorite introductions are a series of various plasma TVs based on the RDRAM. However the majority of the RDRAM volume, this is outside the Playstation II, is in the computer segment so I will spend my time updating you on the three most relevant topics in the computer space which are ,first, Intel, second, SIS and third, Hewlett Packard's Alpha Processor. With respect to Intel, the current 850E continues to be the the last RDRAM chip set on Intel's roadmap, which means the 850E RDRAM driven shipments and royalties are and will be declining in the ultimate end of life next year. Despite this RDRAM based PCs continue to ship from Dell, Gateway, and other companies targeting enthusiasts.

I noticed reading "PC World" over the world weekend, that the RDRAM-based Dell 8250 continues to be rated by PC World as their number one desktop PC for power users. On SIS, their chip set has entered the market. [INAUDIBLE], a leading motherboard vendor, recently announced the R658 motherboard with 1200 megahertz RDRAMs. But with SIS, we are particularly excited about their next chip set, the SIS R659. We are optimistic that it will become the best in class and ultimately win the awards for the performance and gaming PCs that contain it. The RS 659 chip set was announced in February by SIS, Samsung, [INAUDIBLE] and Rambus and included statements from SIS that their plan is to sample the RS 659 in the third quarter of 2003. One of the technical attributes of the RS 659 is that it will deliver 4 channels of 1200 megahertz RDRAM. Which will result in 9.6 gigabytes per second of bandwidth. This is a 50% performance boost above competing solutions while using existing infrastructure to reduce overall system costs. Lastly on the RDRAM front, I want to remind you in January HP announced it had begun shipping the most advanced Alpha server, the ED7, with RDRAM memory. The Alpha microprocessor has ten RDRAM channels directly attached to it. The net result is several times more memory bandwidth than the best of class Intel or AMD processor. That concludes a review of our product lines.

I would like to cover two changes to our senior management and Board of Directors. First Steve Toback, who was up until recently, our marketing VP has left to pursue a consulting project that will allow him to spend more time with his family, and we wish him well. Second we are pleased that Kevin Kennedy has joined the Board of Directors. He brings 26 years in the networking and communications market which is of increasing importance to us. Dr. Kennedy is also currently on the Board of Directors of JDS Unibase, Quantum, and Openwave System, where he is the Chief Operating Officer. Prior to Openwave, Kevin was Senior Vice President at Cisco systems. He is an important addition to our independent Board of Directors with furthers our intent to continuously improve our corporate governance. In summary, we started out 2003 with tremendous momentum and excitedly working with a stellar list of customers and solving their challenging interface problems. To that end we are on track to our goal of increasing our engineering staff by 25% throughout the year. That's the end of our prepared market remarks and now open up the lines for questions.

OPERATOR: Ladies and gentlemen, at this time I would like to remind everyone to press star then the number 1 on the keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Michael Cohen with Pacific American Securities.

MICHAEL COHEN, ANALYST, PACIFIC AMERICAN SECURITIES: Hi, my first question is for John. I understand the administrative law judge for the FCC is going to begin hearing the case this month and time is getting closer. Do you have any idea when this will conclude? I know they like to do it within a year.

JOHN DANFORTH, SR. VP & GENERAL COUNSEL, RAMBUS INC.: Mike, it's John Danforth. I think I can help with that question. Again, the beginning of the trial is April 30th. It hasn't changed. We understand that complaint council for the FTC is estimated that they need, I believe, four to five weeks on their case. We'll put on our case in less time. You can figure out that that's going to be very close to the one-year deadline. There is a procedure whereby the AOJ can take a look and decide it's an extraordinary case and give another couple of months to get a decision done.

MICHAEL COHEN: So could easily go into July and potentially carry in to the end of the summer is they need time.

JOHN DANFORTH: He can give himself until August but that's my best recollection based on a review of the rules a while ago.

MICHAEL COHEN: Okay. That helps a lot. I also have a question for Bob.

ROBERT EULAU: We'll take two questions from you but then we need to give other folks a chance as well.

MICHAEL COHEN: Thank you. The R&D expenses up $1.2 million over last quarter, it said in the press release it was primarily for Yellowstone and Redwood? Would that be related to Toshiba's and Sony's contract or is that Yellowstone and Redwood?

ROBERT EULAU: The portion we booked for R&D is in development of the overall technology. Obviously that supports Sony and Toshiba. Anything specific to those two customer is booked to contract revenue.

MICHAEL COHEN: Got it. Thank you.

ROBERT EULAU: Thanks, Mike.

OPERATOR: Your next question is from Mike Crawford with B. Riley and Company.

MIKE CRAWFORD, ANALYST, B. RILEY & COMPANY: One, what's your understanding with the other company that you have that's paying six royalties currently on DDR and SDRAM and the other question with regards to litigation, that being how -- I guess that's two parts. How one common is it for all these 100 proposed inferences and what happens once the DOJ Grand Jury investigation is complete. Can you bring that discovery into your case or is that out of the picture now?

ROBERT EULAU: So, I guess two questions there. And maybe more. Let me comment first on the DRAM contracts. As I said and we disclosed in our Q and last K as well, there were two companies with interim agreements with fixed payments of royalties. When we were successful in the appeal, one of the two companies, the smaller of the two that company automatically reverted back to the original term of the agreement. The second company we've never been specific about exactly what the milestones are. Needless to say they have not been met yet.

JOHN DANFORTH: Let me talk about the litigation issue quickly that you raised. This is John Danforth. First of all, with respect to the 100 proposed inferences suggested by FTC complaint council, that is an unusual motion. It's more properly characterized as a motion for reconsideration of a denial for a default judgment. As you recall there was a 160 some-odd page motion that the complaint council compiled just before Christmas seeking default. That remedy was denied. There were a handful of inferences--I'm sorry rebuttal presumptions given instead so this looks like a renewal. If you look at the FTC website you'll see our response to each of the inferences. Secondly, with respect to the DOJ proceedings, the DOJ intervened and limited some of our deposition questioning with respect to price fixing issues. My guess is we'll not see a conclusion for the DOJ investigation in time for us to use whatever the DOJ has by way of evidence in our own case. That's unfortunate. But we do think that we will be entitled to raise, to introduce a lot of evidence that has to do with collusion and you can see this on the FTC website, there's actually motion practice that's pending on this issue right now. That issue is not simply a question of us trying to show unclean hands by the DRAM manufacturers but as we point out by the papers on the website which you can download, that evidence goes to a number of key elements the council has to prove and we think that that evidence will come in at least on that basis. I hope that's helpful.

MIKE CRAWFORD: Thanks.

ROBERT EULAU: Thanks, Mike. Again, we have I think reasonable amount of time. One question at a time so we get more folks in here.

OPERATOR: Your next question comes from Erach Desai with American Technology Research.

ERACH DESAI, ANALYST, AMERICAN TECHNOLOGY RESEARCH: Okay, Bob, let me try it a different way. How about a clarification and a question.

ROBERT EULAU: You guys are so creative.

ERACH DESAI: On the clarification side, I was wondering as I look at netting out your extraordinary income on the gains and the extraordinary, I guess, expense on the R&D, would it be correct to say that you had 6 cents per share EPS?

ROBERT EULAU: I don't understand how you would get there. Let me go through what transpired again. Overall, let me look at the numbers again and make sure I get it right. We recognized a gain associated with this transaction of $1.7 million on the other income line.

ERACH DESAI: Yep.

ROBERT EULAU: And then we simultaneously recognized R&D expense of $500,000. So if you net those two together, that's a pre tax overall gain of $1.2 million. After taxes that works out to $800,000.

ERACH DESAI: Okay. I guess looking at it in a different way then, is the 500,000 of expense included in the 7267 R&D line?

ROBERT EULAU: Yes, it is.

MIKE CRAWFORD: The question, then, is in terms of your revenue outlook as you provided the range of 27-29, I guess to the extent that you can be granular on it, we know that the specific Sony/Toshiba contract will also be ramping up, would that be fair to say that will be in the $4.5 to 5 million range? I understand on a milestone basis but roughly speaking.

ROBERT EULAU: Unfortunately, it's so difficult to give guidance on any line item in revenue in particular is difficult in this sort of economic environment. I really hesitate to go below the high level guidance we gave. At a high level we can be confident in that range. As we get to smaller pieces, it's harder to give credible guidance.

ERACH DESAI: Thanks.

ROBERT EULAU: Sure.

OPERATOR: Your next question comes from the line of Steve Allen with Sterling Financial.

STEVE ALLEN, ANALYST, STERLING FINANCIAL: Hi, Bob. How are you doing?

ROBERT EULAU: Hi, Steve. Fine, thanks.

STEVE ALLEN: And my question is and I only have one, the repurchase of shares, you repurchased 1.4 million shares?

ROBERT EULAU: That's correct.

STEVE ALLEN: And how are you accounting for that as far as expenses and earnings?

ROBERT EULAU: I mean, as we purchase those shares, it goes into our -- well, it reduces our cash and goes into our equity section and then we reduce our overall shares outstanding.

STEVE ALLEN: So you've reduced them by $1.4 million and you have the right to purchase up to $4.7 million additional shares?

ROBERT EULAU: That's correct. If you really get into details here. The way the calculations for average shares outstanding works is we average in the repurchases during the quarter. You wouldn't get the full 1.4 million effect immediately going forward you have that effect.

STEVE ALLEN: Very good. Thank you.

OPERATOR: Again, ladies and gentlemen. I would like to remind everyone, in order to ask a question press star 1 on the telephone keypad. Your next --

ROBERT EULAU: We have time for one more.

OPERATOR: The next is from the line of Jeff Shriner with MS Capital Management. The next is from the line of Jeff Shriner.

JEFF SHRINER, ANALYST, MS CAPITAL MANAGMENT: I'll keep it to one quick question so we can get out of here. Mr. Danforth, it was discussed in the public forum of the announcement of the Cap decision and I might be mistaken, wasn't the Cap decision allowed to be mandated? Could it end up at the Supreme Court at some point?

JOHN DANFORTH: I think I understand the question. The CIFC ruling has become the final ruling of the court of appeals. As you know, there was a motion for reconsideration by the panel and rehearing on bond. Both of those motions were denied. There is a process by which the loser in an appellate decision after being denied rehearing on bond, can seek what's called [INAUDIBLE], which is a discretionary level of appeal by the U.S. Supreme Court and writs of [INAUDIBLE] are collected by the Supreme Court and then they review them and by October they decide which they want to grant. This is the case which appears to us to involve fairly unique facts. No broad issues, no conflicts among the circuits. Not a great candidate for [INAUDIBLE]. I'm sure the other side will do their best. They put a lot of resources into the case so far.

I guess from your question, I think, is a question about whether or not this decision is going to be kind of the rule for all other cases going forward and technically, of course, a decision is usually only binding on the parties to the underlying litigations. That, in this case would be Infinion. But there are other factors here and certainly this is very powerful precedential material. In all of the cases. I think I said this before in the past, I've said it in press releases, we expect other parties to pay close attention to the reasoning of the court of appeals, which seems quite sound to us, and the [INAUDIBLE] related case that claims against Rambus on a variety of independent grounds, I think that answers your question.

JEFF SHRINER: Thank you, John.

JOHN DANFORTH: You're welcome.

ROBERT EULAU: Okay. I'd like to thank everybody for joining us today. We appreciate your questions, and thanks again.

DAVID MOORING: Thank you.

OPERATOR: Ladies and gentlemen, this concludes today's Rambus quarter earnings conference call. Thank you for your participation. You may now disconnect.

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