During 2010, the cash will likely be pouring into Rambus like Niagara Falls.
$200mm up front cash payment from Samsung.
$400mm expected from the Hynix patent infringement case.
$200mm in new Rambus stock purchased by Samsung.
And probably a big check coming in from Nvidia, for at least forward licensing of Rambus patents by Nvidia.
If Nvidia doesn’t come to terms with Rambus -- fast -- to obtain forward licenses for the Rambus patents they have been using, Nvidia video cards are going to be stacking up on the dock in Taiwan, with no where to go.
This is due to the decision late in the day last Friday by the U.S. International Trade Commission that Nvidia has indeed infringed on three of Rambus patents.
The penalty can (will) be a sanction from the US ITC, placing a total ban on the importing or sale the infringing Nvidia products in the United States. “We are disappointed with the ruling,” said a spokesperson for Nvidia.
Disappointed or not, our friends from Nvidia (they truly do make great video accelerator cards – I’m using one now) need to get licensed quick, or Nvidia’s sales will fall off a cliff without the U.S. market.
So, with good probability, we can expect to see a big check from Nvidia during 2010 as well.
For discussion purposes, let’s just call it a nice round billion dollars of incremental cash coming in to Rambus this year.
So what does Rambus buy next?
A high tech company like Rambus needs to re-invest the cash into high tech -- not “dumb” uses for it like just holding cash reserves, real estate, pay down debt, pay a dividend, or buy back stock.
To justify a high PE multiple going forward, Rambus needs to continue to make more acquisitions of other IP companies with licensable patents and technology.
So, with a billion dollars of fresh cash on the horizon, what do they buy next?