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Intel patent payments save Rambus' bacon

Turns loss and revenue decline to profit and income increase

Well now we know. Intel will pay Rambus $40 million a year for the next five years under the terms of the pair's latest patent licensing agreement.

As we noted yesterday, Intel not only extends its right to build RDRAM-based chipsets - most notably the upcoming Tulloch product, the successor to the i850 - but now has the right to use all other Rambus technologies too.

But it goes deeper. To Rambus, the deal means more than just cash - it marks a significant upturn in the company's fortunes. Rambus had previously forecast it would see a 20 per cent decline in its revenues this quarter, its fourth, but thanks to Intel, that will become a 16 per cent increase - an unheard of feat in these days of declining fortunes in the hi-tech market.

And since this is cash going straight to Rambus' bottom line, the company expects to see a loss-making quarter become a profit-earning one. Income is likely to be in the order of $600,000 (six cents a share), Rambus said. Q4 revenues will hit $27-29 million.

Rambus confirmed that the deal paves the way for the smooth introduction of the DDR version of Intel's i845 chipset, with a licence to Rambus' SDRAM and DDR patents - though in the light of the outcome of Rambus' legal battle with Infineon, the value of the SDRAM patents in particular is questionable. The jury in that case ruled that some of those patents had been obtained fraudulently.

And the new agreement tears up the restrictions placed upon Intel to prevent it from releasing a DDR chipset before 2003.

It was Intel's earlier support for Rambus that caused it such trouble in the marketplace, as PC buyers - corporates in particular - steered clear of what they perceived as untried, expensive technology, and others felt that Intel was wrong to use its weight to force adoption of a specific memory technology.

Intel claims it's now more memory-agnostic, but the degree to which the latest deal is advantageous to Rambus calls that into question, either because Intel still prefers Rambus' solution, or the memory developer has a very strong grip on the chip giant's goolies. ®

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