Introduction
This is the August 22, 2012 article for the EDACafe.com EDA Commentary, entitled, “Electronics IP Industry – Q2 2012.”
Herein we return our quarterly attention to the phenomenon of the rise of Intellectual Property (IP) in the world’s Electronics Industry, a segment of Electronic Design Automation (EDA) that Henke Associates began reporting on separately in 2003.
At the beginning, we covered eight (8) publicly-traded IP companies from around the world (called the "Group-of-8" or "G8"), as representative of the financial state of the nascent Electronics IP Industry. Subsequently, ARM absorbed Artisan Components in 2004; Mentor Graphics acquired LogicVision in 2009; and Synopsys bought Virage Logic in 2010. So nowadays, when we report on the Electronics IP Industry quarterly financials, the G5 listed below are included:
LAST YEAR’S (Q2 2011) G5 IP financial results were posted here on August 22, 2011, in the midst of a period of economic volatility that was precipitated by the US Government's debt ceiling debate in Washington DC. The debate was started when a small group from one political party chose that routine approval process to try to advance its radical “tea party” agenda. The results of that debate were economic uncertainty and the subsequent reduction of the USA’s credit rating by S&P from AAA to AA+.
The aforementioned continuing volatility in the economy was visible to anyone looking at the stock markets’ performances by the time of the posting of the Q3 2011 IP Industry Commentary on November 14, 2011. Below is a graph of the six months of the NASDAQ Composite leading up to that date. Please note: (a) the relative stability of the Composite curve at just above the 2800 level for the initial months shown till late July 2011; (b) the steep plunge to below 2400 by mid-August 2011; (c) the relatively wild oscillations from mid-August 2011 through mid-November 2011; and (d) the NASDAQ Composite index never closing at 2800 or above during the entire reporting period after mid-August 2011 through November 14, 2011:
NASDAQ Close Nov 04, 2011 = 2686.15
52 week range up to Nov 04, 2011 = 2298.89 – 2887.75
In December 2011, the market again began reflecting actual economic promise, but it wasn’t until January 25, 2012 that the NASDAQ Composite finally closed above 2800 again. By then, the US economy had begun to show consistent improvement, breaking through the artificial barriers from the political opposition.
So from mid December 2011 on, with only a few minor valleys, the NASDAQ Composite grew at a powerful upward slope, flirting with 3090.08 on March 21, 2012, closing at 3067.92 on March 23, 2012, having just closed at a high of 3078.32 on March 19, 2012.
The NASDAQ market then flattened out through mid-March and continued for the most part to enjoy life above the 3000 level for nearly three months of health, until the index began slipping a little in the period between May 04, 2012 and May 19, 2012, where we left it in our last quarterly IP Commentary:
The initial impact of that worrisome May 2012 market deterioration on the individual and collective IP G5 vendors’ Stock Prices and Market Caps was presented at the conclusion of the May 25 IP Commentary for Q1 2012:
Negligible Dips
As it happened, however, that May 2012 market dip turned out to be far shorter and shallower than the dip endured from August to December 2011. The May 2012 dip closed below 2800 for only 4 days before returning to a healthier upward slope around June 12 to close above 3000 again on August 7, 2012, then closing at 3062.39 on August 16, 2012. See the right side of the chart below.
So the stock market during calendar Q2 2012 (April, May and June 2012), the period of the G5 IP financial reports herein, was fairly benign, as the left side of the chart above shows.
Indeed, when one considers the disastrous state of economy as the year 2008 ended (the January 2009 gaping valley on the NASDAQ price chart below was at 1268), compared to the IXIC’s overall performance for the past 43 months, the dips since by comparison have been very shallow indeed:
| 2009 | 2010 | 2011 | 2012-->
G5 Electronics IP Vendor by Vendor Details – Q2 2012
Let’s first look at the individual performances of each member of the Group of Five (a.k.a. the G5) Electronics IP players for Q2 2012. Then we’ll follow up with a summary of the by-now-familiar Tables of Revenues and Profits of the entire G5 for Q2 2012 (and the four quarters leading up to Q2 2012), as well as some bar graphs of previous and current quarterly P&L’s.
All of the G5 Electronics IP vendors were prompt this quarter in releasing their respective financial results. Indeed, if the original schedule had been followed, the five Q2 2012 reports would have all been released between July 18, 2012 and August 6, 2012, a span of only 20 days. However, MIPS required more time to complete its August 6th Q2 report, issuing it finally on August 15, an actual span of 29 days.
ARM Holdings is the world's leading semiconductor intellectual property (IP) company. ARM’s strategy is for its technology to continue to gain share in long-term structural growth markets such as mobile phones, consumer electronics and embedded digital devices. To date, ARM has licensed its technology nearly 850 times to nearly 300 ARM partners, who have shipped over 30 billion ARM-based chips.
On July 25, 2012 ARM Holdings plc announced its unaudited financial results for Q2 2012, the second quarter ended June 30, 2012.
ARM IFRS Revenue in Q2 2012 increased to £135.5 million, up only 2.26% sequentially over the £132.5 million in revenue achieved in Q1 2012, but up 15.2% year-over-year vs. the £117.8 million revenue posted in Q2 2011.
Expressed in US$, ARM IFRS Revenue in Q2 2012 increased to $213.0 million, up only 1.72% sequentially over the $209.4 million in revenue achieved in Q1 2012, but up 11.99% year-over-year vs. the $190.2 million revenue posted in Q2 2011.
ARM IFRS Profit Before Tax (PBT) in Q2 2012 was £54.8 million in Q2 2012, up only 6.82% sequentially over the £51.3 million in PBT achieved in Q1 2012, but up 62.13% year-over-year vs. the £33.8 million PBT posted in Q2 2011.
The foregoing translates to ARM IFRS Profit Before Tax (PBT) of $86.04 million in Q2 2012, up 5.48% sequentially over the $81.57 million in PBT achieved in Q1 2012, but up 58.10% year-over-year vs. the $54.42 million PBT posted in Q2 2011.
ARM IFRS Net Income was £ 39.4 Million in Q2 2012, up only 5.35% sequentially over the £ 37.4 million in net income achieved in Q1 2012, but up 48.29% year-over-year vs. the £ 26.57 million net income posted in Q2 2011.
In US$, ARM IFRS Net Income was $61.86 million in Q2 2012, up only 4.02% sequentially over the $59.47 million in net income achieved in Q1 2012, but up 44.61% year-over-year vs. the $42.78 million net income posted in Q2 2011.
In Pence, IFRS EPS were 2.83 in Q2 2012, up 4.81% sequentially vs. 2.70 in Q1 2012, and up year-over-year 45.63% over 1.93 in Q2 2011.
In US$, IFRS EPS were $0.044 in Q2 2012, up 1.15% sequentially vs. $0.0435 in Q1 2012, and up year-over-year 44.37% over $0.03069 EPS in Q2 2011.
The fx factors used by ARMH: 1.57 for Q2 2012, 1.61 for Q2 2011, and 1.59 for Q1 2012.
ARM Progress on key growth drivers in Q2 2012
• Growth in adoption of ARM® processor technology
o 23 processor licenses signed across key target markets from microcontrollers to mobile computing
o ARM’s momentum in networking continues with an ARMv8 architecture license for intelligent networking applications, and Freescale announcing its first ARM-processor based chips for network infrastructure
• Growth in shipments of chips based on ARM processor technology to 2.0 billion chips shipped into a wide range of applications, up 9% year-on-year compared with industry shipments being down 4%
o Processor royalties grew 14% year-on-year compared with a decline in industry revenues of 7%
• Growth in outsourcing of new technology o 3 Mali™ graphics processor licenses signed in Q2, of which two were with new customers for Mali technology
o 5 physical IP Processor Optimization Packs licensed, enhancing ARM’s royalty opportunity per chip
Warren East, Chief Executive Officer, said:
“ARM’s royalty revenues continued to outperform the overall semiconductor industry as our customers gained market share within existing markets and launched products which are taking ARM technology into new markets.”
Warren East
“This quarter we have seen multiple market leaders announce exciting new products including computers and servers from Dell and Microsoft, and embedded applications from Freescale and Toshiba. In addition, ARM and TSMC announced a partnership to optimize next generation ARM processors and physical IP and TSMC's FinFET process technology. All of these new products are the result of technology engagements over many years, and ARM's long-term commitment to invest in the development of innovative technology.”
Outlook
ARM enters the second half of 2012 with a record order backlog and a robust opportunity pipeline. Relevant data for the second quarter, being the shipment period for ARM’s Q3 royalties, points to a small sequential increase in industry revenues. Q4 royalties are harder to predict as macroeconomic uncertainty may impact consumer confidence, and some analysts have become less confident in the semiconductor industry outlook in the second half. However, building on our strong performance in the first half, we expect overall Group dollar revenues for full year 2012 to be in line with (previously-stated) market expectations.
People
As of June 30, 2012, ARM had 2,253 full-time employees, a net increase of 137 since the start of the year, with 77 new employees in Q2 2012 alone. At the end of June, the Group had 921 employees based in the UK, 573 in the US, 279 in Continental Europe, 317 in India and 163 in the Asia Pacific region.
If all four quarters of 2012 produced the same amount of revenues as Q2 2012, ARM would enjoy revenues per full time employee of $378,162 for the full year in 2012.
ARM SELF-DESCRIPTION:
ARM designs the technology that lays at the heart of advanced digital products, from wireless, networking and consumer entertainment solutions to imaging, automotive, security and storage devices. ARM’s comprehensive product offering includes 32-bit RISC microprocessors, graphics processors, video engines, enabling software, cell libraries, embedded memories, high-speed connectivity products, peripherals and development tools. Combined with comprehensive design services, training, support and maintenance, and the company’s broad Partner community, they provide a total system solution that offers a fast, reliable path to market for leading electronics companies. More information on ARM is available at
http://www.arm.com.
ARM is a registered trademarks of ARM Limited. ARM7, ARM9, ARM11, Cortex and Mali are trademarks of ARM Limited. All other brands or product names are the property of their respective holders. “ARM” is used to represent ARM Holdings plc; its operating company ARM Limited; and the regional subsidiaries: ARM Inc.; ARM KK; ARM Korea Ltd.; ARM Taiwan Limited; ARM France SAS; ARM Consulting (Shanghai) Co. Ltd.; ARM Belgium Services BVBA; ARM Germany GmbH; ARM Embedded Technologies Pvt. Ltd.; ARM Norway AS; and ARM Sweden AB.
ARM HOLDINGS PLC
Bar Graph Source: Google Finance
Q2 2012 REV 135.5 million GBP
Q2 2012 NET INC 39.4 million GBP
Q2 2012 EPS 2.83 pence
08/10/12 CLOSING STOCK PRICE: $27.10
08/10/12 MKT CAP $12.44B
08/10/12 STOCK PRICE RANGE: $26.63 – $27.16
52 WEEK RANGE: $21.64 – $31.55
On July 31, 2012 CEVA, Inc. announced its financial results for the second quarter ended June 30, 2012.
CEVA makes DSP cores (DSP = Digital Signal Processor) and platform solutions for the mobile, digital home and networking markets. For more than twenty years, CEVA has been licensing a portfolio of DSPs, platforms and software to leading semiconductor vendors and original equipment manufacturer (OEM) companies worldwide. CEVA's IP portfolio includes comprehensive technologies for cellular baseband (2G / 3G / 4G), multimedia, HD video, HD audio, voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA).
Headquartered in Mountain View, California, CEVA has 190 employees worldwide, with design centers in Israel and Ireland, and sales and support offices located in Europe, the US and throughout Asia. To date, more than 3 billion CEVA-powered chips have been shipped worldwide, for a wide range of diverse end markets. In 2011 alone, CEVA licensees shipped more than 1 billion CEVA-powered products. Recent industry data from The Linley Group reported CEVA’s share of the licensable DSP market at 78%.
With more than 200 licensees and 300 licensing agreements signed to date, CEVA’s comprehensive customer base includes many of the world’s leading semiconductor and consumer electronics companies. Broadcom, Broadlight, Icom, Intel, Intersil, Marvell, Mediatek, Mindspeed, MStar, NEC, NXP, Nufront, PMC-Sierra, Renesas, Samsung, Sharp, Solomon Systech, Sony, Spreadtrum, ST Ericsson, Sunplus, VIA Telecom and Xincomm all leverage CEVA’s industry-leading DSP cores and IP solutions. These companies incorporate CEVA IP into application-specific integrated circuits (“ASICs”) and application-specific standard products (“ASSPs”) that they manufacture, market and sell to consumer electronics companies.
The CEVA business model consists of three components; upfront license fees; royalty revenue from every chip sold by its customers incorporating CEVA IP, and; revenues from related customer support, development tools and maintenance.
CEVA was created through the combination of the DSP IP licensing division of DSP Group, Inc. and Parthus Technologies plc (“Parthus”) in November 2002. CEVA is traded on both NASDAQ Global Market ( CEVA) and the London Stock Exchange ( CVA).
CEVA Second Quarter 2012 Financial Results Highlights
-- Strategic licensing agreement signed with Tier 1 handset OEM for LTE products
-- First license agreement for CEVA-XC4000 DSP for LTE- Advanced
-- Repurchased 670,000 shares for approximately $11.3 million during the quarter
Total revenue for the second quarter of 2012 was $13.59 million, a sequential decrease of 10.06% compared to $15.11 million in Q1 2012, and a decrease of 5.56% year over year compared to $14.39 million for the second quarter of 2011.
Licensing revenue for the second quarter of 2012 was $5.4 million, an increase of 3% compared to $5.2 million reported for the second quarter of 2011. Royalty revenue for the second quarter of 2012 was $7.6 million, compared to $8.3 million reported for the second quarter of 2011. Revenue from services for the second quarter of 2012 was $0.6 million, compared to $0.9 million reported for the second quarter of 2011.
Gideon Wertheizer, Chief Executive Officer, stated: "The second quarter was the strongest licensing quarter in more than three and a half years, driven by a strategic licensing agreement with a tier 1 handset OEM for a range of LTE handsets and the first agreement for our newest DSP, the CEVA-XC4000 for LTE- Advanced. These latest agreements bring the total LTE design wins for CEVA DSPs to date to more than 20, and form the foundation for future royalty growth.”
CEO Wertheizer
“Finally, while the competitive 2G market is experiencing pricing pressure, our volume growth in the lucrative 3G market during the quarter significantly outpaced that of the overall 3G space, as low and mid-range 3G smart phones gain traction."
US GAAP net income for the second quarter of 2012 was $3.48 million, a decrease of 15.33% from $4.12 million reported for the same period in 2011, and a decrease of 28.40% from the $4.86 million net income in sequential Q1 2012.
US GAAP diluted earnings per share for the second quarter of 2012 were $0.15, a decrease of 11.76% compared to $0.17 for the second quarter of 2011 and a decrease of 15.0% from the $0.20 in Q1 2012.
During the second quarter of 2012, the Company secured eight new license agreements. Six of the agreements were for CEVA DSP cores, platforms and software, and two agreements were for the CEVA Bluetooth product line. Target applications for customer deployment are LTE smart phones, microcells, broadband communications and connectivity. Geographically, three of the agreements signed were in the US and five were in the Asia Pacific region.
Yaniv Arieli
Yaniv Arieli, Chief Financial Officer, stated, "During the quarter, we bought back approximately 670,000 shares of our common stock for an aggregate consideration of approximately $11.3 million. The recent buyback activity continues to demonstrate our confidence in CEVA's strong fundamentals. At the end of the quarter, our cash balance, marketable securities and bank deposits totaled $156 million. We have approximately 900,000 shares available for repurchase remaining under our existing buyback program."
CEVA, Inc. self description
CEVA is the world's leading licensor of silicon intellectual property (SIP) DSP cores and platform solutions for the mobile handset, portable and consumer electronics markets. CEVA's IP portfolio includes comprehensive technologies for cellular baseband (2G / 3G / 4G), multimedia (HD video, Image Signal Processing (ISP) and HD audio), voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA). In 2011, CEVA's IP was shipped in over 1 billion devices and powers handsets from every top handset OEM, including HTC, Huawei, LG, Motorola, Nokia, Samsung, Sony and ZTE. Today, more than 40% of handsets shipped worldwide are powered by a CEVA DSP core. For more information, visit
www.ceva-dsp.com
CEVA. Inc.
Bar Graph Source: Google Finance
Q2 2012 REV $13.59 million
Q2 2012 NET INC $ 3.48 million
Q2 2012 EPS $ 0.15
08/10/12 CLOSING STOCK PRICE: $16.43
08/10/12 MKT CAP $ 379.75 million
08/10/12 STOCK PRICE RANGE: $16.21 – $16.59
52 WEEK RANGE: $14.25 – $34.50
On August 6, 2012 MIPS Technologies, Inc. (NASDAQ: MIPS) announced preliminary revenue for its fourth fiscal quarter and fiscal year ended June 30, 2012. MIPS fourth fiscal quarter is calendar Q2 for this EDA IP Commentary. The Company also rescheduled its earnings conference call (to August 15, 2012) while it finalized certain expense accruals.
Revenue for the entire MIPs fiscal year 2012 was $86.2 million, a year-to-year increase of five percent.
Revenue for the second calendar quarter was $38.4 million, with revenue from royalties of $10.6 million, and revenue from licensing of $27.8 million, including the recent Broadcom license.
On August 15, 2012 MIPS Technologies, Inc. (NASDAQ: MIPS), reported the remainder of its consolidated financial results for its fourth fiscal quarter and fiscal year ended June 30, 2012. All financial results are reported in US GAAP unless otherwise noted.
Selected Fiscal 2012 Financial Highlights:
- Revenue was $86.2 million, a year-to-year increase of five percent
- Licensee royalty units grew to 708 million units from 656 million units in FY'11
- Cash and investment balances ended the year at $110.9 million
Calendar Q2 2012 Financial Details:
MIPS Revenue for Q2 2012 was already reported at $38.4 million. (To be exact it was $38.379 million, 250.29% of the Q1 2012 sequential quarter revenue of $15.33 million, and 218.10% of Q2 2011 year over year revenue of $17.597 million).
The Company's Q2 2012 GAAP net income was $17.247 million or $0.31 per share compared to a net loss of $2.533 million and NEGATIVE $0.05 per share in year over year Q2 2011.
Sandeep Vij
"In the fourth (fiscal) quarter, we signed one of the largest licensing agreements in MIPS Technologies' history. This license is the first tangible result of our strategic efforts around patent monetization, and we continue to consider all of our options in this area. In (fiscal) Q4 we also entered a new era of product innovation with the announcement of our new AptivTM Generation of microprocessors, which push performance and efficiency to new levels," said Sandeep Vij, chief executive officer, MIPS Technologies. .
About MIPS Technologies, Inc.
MIPS Technologies, Inc. (NASDAQ: MIPS) is a leading provider of industry-standard processor architectures and cores for home entertainment, networking, mobile and embedded applications. The MIPS architecture powers some of the world's most popular products. Our technology is broadly used in products such as digital televisions, set-top boxes, Blu-ray players, broadband customer premises equipment (CPE), WiFi access points and routers, networking infrastructure and portable/mobile communications and entertainment products. Founded in 1998, MIPS Technologies is headquartered in Sunnyvale, California, with offices worldwide. For more information, contact (408) 530-5000 or visit www.mips.com.
MIPS and MIPS-Based are trademarks or registered trademark of MIPS Technologies, Inc. in the United States and other countries.
MIPS stock suffered a setback on Thursday August 16, as shown by the step off below. Thursday’s was the first market session since the earnings announcement was made by MIPS after the market closed on Wednesday August 15. The stock closed Thursday at $6.09 per share, but began to recover somewhat on Friday August 17.
MIPS Technologies, Inc.
Bar Graph Source: Google Finance
Q2 2012 REV $38.38 million
Q2 2012 NET INC $17.24 million
Q2 2012 EPS $ 0.31
8/15/12 CLOSING STOCK PRICE: $6.58
08/15/12 MKT CAP $ 365.3 million
08/15/12 STOCK PRICE RANGE: $6.546 - $6.73
52 WEEK RANGE: $3.93 - $7.34
On July 20, 2012 MoSys, Inc. reported financial results for the second quarter ended June 30, 2012.
MoSys is an IP-rich fabless semiconductor company that provides high performance solutions for fast, intelligent data access in network and communications systems. Engineered and built for high-reliability carrier and enterprise applications, MoSys products are breaking bandwidth barriers in data processing to allow for faster packet access and analysis, enabling higher speed, expanded user capacity, and new capabilities required by the expanding global infrastructure.
The number of users, amount of data and new services are expanding rapidly, spurring the demand for increased packet processing on aggregate data rates in excess of 100 Gigabits per second (Gbps) in networking and communication equipment. Applications such as video-on-demand, Internet protocol TV, peer-to-peer and Cloud Computing, Web 2.0 applications, as well as 3G and 4G are bandwidth intensive. Service providers need new technologies to manage user experience, quality of service, and network security. This means routers, switches, and telecom equipment need to support both data rates in the 100s of Gbps and increased data processing requirements. In order to meet these requirements, bandwidth bottlenecks between data processing elements and memory must be solved.
The Bandwidth Engine IC, with its combination of serial I/O, high-speed memory, and efficient, intelligent access, drastically increases memory accesses per second, removing these bottlenecks.
Second Quarter Highlights
- Released first generation carrier-grade Bandwidth Engine® IC to production;
- Shipped first Bandwidth Engine IC production units;
- Expanded sales channel coverage in North America; and
- Ended the quarter with total cash and investments of approximately $49 million.
Management Commentary
Commenting on the quarter, Len Perham, MoSys' President and Chief Executive Officer, said: "In the quarter, we released our first generation Bandwidth Engine IC into production and made initial production shipments for customer prototyping and system-level qualifications. The commencement of production shipments represents another major achievement in our evolution to become a fabless semiconductor company.”
Len Perham
“We also completed multiple, onsite operational audits that fully affirmed our ISO 9000 compliance and carrier-grade rating, further assuring customers that we have the capabilities to meet or exceed their quality standards and support their future volume production requirements. “
"We continue to collaborate closely with new and existing customers to integrate our high-speed, serial access Bandwidth Engine IC into their next-generation systems. Over the last few months, we expanded our sales and support channel, with a strong focus on accelerating customer adoption and increasing design win momentum."
Second Quarter Results
Total net revenue for the second quarter of 2012 was $1.74 million, up 22.54% compared with $1.42 million reported in the sequential first quarter of 2012, and down 47.11% compared to $3.29 million in the year over year second quarter of 2011.
Second quarter 2012 total revenue included licensing and other revenue of $0.6 million, compared with $0.2 million for the previous quarter and $1.2 million for the second quarter of 2011. Second quarter 2012 royalty revenue was $1.1 million, compared with $1.2 million in the previous quarter and $2.1 million for the second quarter of 2011.
GAAP net loss for the second quarter of 2012 was $6.55 million, or ($0.17) per share, compared with a net loss of $7.15 million, or ($0.19) per share, in the previous quarter and a net loss of $5.65 million, or ($0.15) per share, for the second quarter of 2011. As of June 30, 2012, cash and investments totaled $48.9 million.
About MoSys, Inc.
MoSys, Inc. (NASDAQ: MOSY) is an IP-rich fabless semiconductor company that provides high performance solutions for fast, intelligent data access in network and communications systems. Engineered and built for high-reliability carrier and enterprise applications, MoSys' products are breaking bandwidth barriers™ in data processing to allow for faster packet access and analysis, expanded user capacity and new capabilities required by the expanding global infrastructure. MoSys' Bandwidth Engine ® family of ICs combines the company's patented 1T-SRAM ® high-density, embedded memory and high-speed, 10 Gigabits per second serial interface with its intelligent access technology and a highly efficient GigaChip™ Interface transport protocol to eliminate bottlenecks in high-speed data access. MoSys is headquartered in Santa Clara, California, and more information is available at http://www.mosys.com.
MoSys, 1T-SRAM and Bandwidth Engine are registered trademarks of MoSys, Inc. in the US and/or other countries. Breaking Bandwidth Barriers, GigaChip and the MoSys logo are trademarks of MoSys, Inc. All other marks mentioned herein are the property of their respective owners.
MoSys, Inc.
Bar Graph Source: Google Finance
Q2 2012 REV $1.74 million
Q2 2012 NET loss $6.55 million
Q2 2012 LPS $ 0.17
08/10/12 CLOSING STOCK PRICE: $3.26
08/10/12 MKT CAP $ 126.75 million
08/10/12 STOCK PRICE RANGE: $2.85 - $3.33
52 WEEK RANGE: $2.76 - $4.75
On July 18, 2012 Rambus Inc. (NASDAQ:RMBS) reported financial results for the second quarter ended June 30, 2012.
Founded in 1990, Rambus is one of the world's premier technology licensing companies. As a company of inventors, Rambus focuses on the development of technologies that enrich the end-user experience of electronic systems. Its breakthrough innovations and solutions help industry-leading companies bring superior products to market. Rambus licenses both its world-class patent portfolio, as well as its family of leadership and industry-standard solutions. Rambus has offices in California, North Carolina, Ohio, India, Germany, Japan, Korea, and Taiwan.
Second Quarter Fiscal 2012 Business and Financial Highlights
- Quarterly revenue of $56.22 million
- Quarterly GAAP diluted loss per share of $0.29
- Signed solutions license agreement with Cooper Lighting for the use of Rambus' patented lighting innovations
GAAP Financial Results:
Revenue for the second quarter of 2012 was $56.22 million, down 10.56% sequentially from the $62.86 million in the first quarter of 2012. This quarter-over-quarter decline was primarily due to recognition of one-time royalty revenue during the first quarter of 2012 from a licensing agreement with MediaTek and lower royalties reported by certain other licensees in the semiconductor industry. This decline was partially offset by the first quarterly royalty payment from Broadcom during the second quarter of 2012.
As compared to the second quarter of 2011, revenue was down 15.09% to $66.21 million primarily due to the decrease in contract revenue, lower royalties reported by certain licensees and expiration of a patent license agreement. The decreased revenue for the second quarter of 2012 as compared to the prior year period was partially offset by revenue recognized from various new patent license agreements signed in the second half of 2011 as well as revenue from certain patent license agreements resulting from the acquisition of Cryptography Research Inc. (CRI).
Revenue for the six months ended June 30, 2012 was $119.1 million, down 8% over the same period of last year, for the same reasons as discussed above.
Total operating costs and expenses for the second quarter of 2012 were $78.0 million, which included general litigation expenses of $4.5 million, $6.2 million of stock-based compensation expenses and $13.4 million of acquisition-related deal costs, retention bonuses and amortization expenses for business acquisitions. This is compared to total operating costs and expenses for the first quarter of 2012 of $80.4 million, which included general litigation expenses of $4.1 million, $6.7 million of stock-based compensation expenses and $14.9 million of acquisition-related deal costs, retention bonuses and amortization expenses for business acquisitions. Total operating costs and expenses for the second quarter of 2011 were $68.7 million, which included general litigation expenses of $11.5 million, $7.0 million of stock-based compensation expenses and $8.4 million related to acquisition-related deal costs, retention bonuses and amortization expenses.
Total operating costs and expenses for the six months ended June 30, 2012 were $158.4 million, which included $12.9 million of stock-based compensation expenses and $28.4 million of acquisition-related deal costs, retention bonuses and amortization expenses for business acquisitions. This is compared to total operating costs and expenses for the six months ended June 30, 2011 of $122.9 million, which included a $6.2 million gain related to the Samsung settlement, $14.3 million of stock-based compensation expenses and $8.4 million of acquisition-related deal costs, retention bonuses and amortization expenses for business acquisitions for the same period of 2011. General litigation expenses for the six months ended June 30, 2012 were $8.6 million, a decrease of $12.1 million from the same period in 2011. The change in total operating costs and expenses was primarily attributable to higher acquisition-related deal costs, retention bonuses and amortization expenses for business acquisitions, partially offset by lower general litigation expenses.
Net loss for the second quarter of 2012 was $32.2 million as compared to net loss of $27.9 million in the first quarter of 2012 and net loss of $10.6 million in the second quarter of 2011.
Diluted net loss per share for the second quarter of 2012 was $0.29 as compared to diluted net loss per share of $0.25 in the first quarter of 2012 and diluted net loss per share of $0.10 in the second quarter of 2011.
Other Financial Highlights:
Cash, cash equivalents, and marketable securities as of June 30, 2012 were $203.2 million, a decrease of approximately $29.3 million from March 31, 2012. During the second quarter of 2012, the Company used $16.7 million to pay retention bonuses related to the acquisition of CRI and $4.3 million to pay the interest expense related to the Company's convertible notes.
During the second quarter of 2012, the Company recorded an income tax provision of approximately $3.8 million. As the Company continues to maintain a full valuation allowance against its US deferred tax assets, the Company's tax provision consists of primarily foreign withholding taxes, current state taxes and foreign taxes.
About Rambus Inc.:
Rambus is one of the world's premier technology licensing companies. As a company of inventors, Rambus focuses on the development of technologies that enrich the end-user experience of electronic systems. Additional information is available at www.rambus.com.
RAMBUS, Inc.
Bar Graph Source: Google Finance
Q2 2012 REV $56.22 million
Q2 2012 NET loss $ 32.22 million
Q2 2012 LPS $ 0.29
08/17/12 CLOSING STOCK PRICE: $4.84
08/17/12 MKT CAP $ 535.77 million
08/17/12 STOCK PRICE RANGE: $4.71 - $4.87
52 WEEK RANGE: $3.78 - $18.55
The Electronics IP G5 Results for Calendar Q2 2012
We have just completed our first look at the individual performances of each member of the Group of Five (G5) Electronics IP players for Q2 2012.
Promised thereafter was a summary of the by-now-familiar Tables of Revenues and Profits of the entire IP G5, this time of course for Q2 2012 (and the four quarters leading up to Q2 2012).
First to Table 1 and the G5 Electronics IP Revenue Sums for the last five quarters:
While the $322.93 million sum of the Q2 2012 revenue for the G5 Electronics IP Vendors exceeded that of Q1 2012, it still came in short of the Q4 2011 sum of $333.50 million. ARM, MIPS, and Mosys improved in the most recent quarter compared to Q1 2012, but Q2 revenue shortfalls from CEVA and Rambus were too large to overcome those improvements, such that Q2 2012 G5 total revenue was still less than that of Q4 2011. Still, Q2 2012 G5 revenue increased both sequentially over Q1 2012 (+6.53%) and year-over-year vs. Q2 2011 (+10.40%).
It is interesting to compare revenue from the G5 IP vendors reported here, to the revenue category for “SEMICONDUCTOR INTELLECTUAL PROPERTY” collected by the EDAC MSS. For this comparison we must use our Q1 data, as the latest available-to-non-members EDAC data are always one quarter in arrears.
According to the latest available EDAC MSS report issued to the public on July 11, 2012, Semiconductor Intellectual Property (SIP) revenue reported by Consortium members totaled $391.3 million in Q1 2012, a 5.4% increase compared to Q1 2011. From our Tab1e 1 above we note that the G5 alone created $303.13 million in Q1 2012, and looking back to our Q1 2011 data in the May 25, 2012 issue of the EDA G5 IP Commentary we see $286.67 million, which represents a growth of $303.13/286.67 = 1.0574 or 5.74%. Of course, non-members do not know the sources of the EDAC data.
Turning now to Table 2 the net income for the G5 for Q2 2012 totals $43,810,000 on $322,930,000 in revenue, yielding an after tax profitability of 13.57% for the sum of 5 entities. Q2 2011 last year yielded 10.79%.
The quarter by quarter ROS% varies wildly by quarter, but the 4 QTR total was 13.72% for these five IP vendors. A similar four quarter average for four MCAD entities was 14.17% ROS; for four EDA entities 10.12% ROS.
The same calculation for ARM alone yields 25.3% ROS.
Notice that Table 1 columns far above calculate the percentage of one quarter over the other, as labeled, whereas in Table 2 just above, the relevant columns provide the numerical dollar differences in earnings between two different quarters as labeled.
On August 3, 2012 the Washington DC-based Semiconductor Industry Association (SIA), representing US leadership in semiconductor manufacturing and design, announced that worldwide sales of semiconductors reached $24.38 billion for the month of June 2012, a slight decrease of 0.1% from the prior month when sales were $24.40 billion. Sales from June 2012 were 2% lower than the June 2011 total of $24.89 billion, but the year-over-year decrease was smaller than it has been since October 2011. All monthly sales numbers represent a three-month moving average.
“The semiconductor industry continues to navigate the turbulent global economy better than most sectors, but macroeconomic uncertainties are limiting overall recovery and growth. The Japan and Asia Pacific sequential increases are encouraging signs, but are tempered by continued weakness in Europe and the Americas,” said Brian Toohey, president & CEO, Semiconductor Industry Association. “Congress can help ease economic uncertainty by enacting effective and dependable policies that promote American competitiveness and spur economic growth. Policymakers should chart a path forward during the August congressional recess and return to Washington, D.C. next month ready to act.”
Regionally, semiconductor sales increased on a sequential monthly basis in Japan (2%) and Asia Pacific (0.6%) but declined in Europe (-0.7%) and the Americas (-3.6%). Compared to June 2011, sales in June 2012 increased in Japan (3.7%) and Asia Pacific (1.0%) but fell steeply in the Americas (-8.1%) and Europe (-12.1%). Japan and Asia Pacific attained month-over-month and year-over-year growth simultaneously for the first time since September 2010.
About the SIA
The Semiconductor Industry Association, SIA, is the voice of the U.S. semiconductor industry, one of America's top export industries and a bellwether measurement of the U.S. economy. Semiconductor innovations form the foundation for America's $1.1 trillion dollar technology industry affecting a U.S. workforce of nearly 6 million. Founded in 1977 by five microelectronics pioneers, SIA unites over 60 companies that account for 80 percent of the semiconductor production of this country. Through this coalition SIA seeks to strengthen U.S. leadership of semiconductor design and manufacturing by working with Congress, the Administration and other key industry groups. The SIA works to encourage policies and regulations that fuel innovation, propel business and drive international competition in order to maintain a thriving semiconductor industry in the United States. Learn more at www.sia-online.org
Note: Readers interested in IP may also like to read an EDACafe BLOG by Peggy Aycinena dated August 23, 2012 at this URL:
About the Writer:
Since 1996, Dr. Russ Henke has been and continues to be active full time as president of HENKE ASSOCIATES, a San Francisco Bay Area high-tech business & management consulting firm. The number of client companies served by HENKE ASSOCIATES during those years now exceeds fifty. Engagement lengths have varied from a few weeks up to ten years and beyond.
During his previous corporate career, Henke operated sequentially on "both sides" of MCAE/MCAD and EDA, as a user and as a vendor. He's a veteran corporate executive from Cincinnati Milacron (Research Scientist), SDRC (President & COO), Schlumberger Applicon (Executive VP), Gould Electronics (President & General Manager), ATP (Chairman and CEO), and Mentor Graphics (VP & General Manager).
Henke is a Fellow of the Society of Manufacturing Engineers (SME) and served on the SME International Board of Directors. Henke was also a board member of SDRC, PDA, ATP, and the MacNeal Schwendler Corporation, and he currently serves on the board of Stottler Henke Associates, Inc.
Henke is also a member of the IEEE and a Life Fellow of ASME International.
In April 2006, Dr. Henke received the 2006 Lifetime Achievement Award from the CAD Society, presented by CAD Society president Jeff Rowe at COFES2006 in Scottsdale, AZ. In February 2007, Henke became affiliated with Cyon Research's select group of experts on business and technology issues as a Senior Analyst. This Cyon Research connection aids and supplements Henke's ongoing, independent consulting practice (HENKE ASSOCIATES).
Beginning in May 2003 HENKE ASSOCIATES had published more than 100 independent commentary articles on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé. Dr. Henke then became a contributing editor of the EDACafé.com EDA WEEKLY from November 01, 2009 until March 31, 2012, posting thirty-two EDA WEEKLY articles during that period; URL's available. Effective April 01, 2012 he continues to contribute EDA and MCAD COMMENTARIES, and also writes a periodic blog for EDACafe.com and/or MCADCafe.com.
Further information on HENKE ASSOCIATES and URL's for past Commentaries, WEEKLIES, etc., are available at
March 31, 2012 marked the 16th Anniversary of the founding of HENKE ASSOCIATES.