Rambus Inc (RMBS) 2004 Q3 法說會逐字稿

Good afternoon, my name is Amanda, and I will be your conference facilitator. At this time, I would like the welcome everyone to the Rambus third quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. If you would like a ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question press star, then the number 2 on your telephone keypad. Thank you. I would now like to turn the call over to Bob Eulau. Please go ahead, sir.

Thank you, Operator, and welcome, everyone, to our conference call. We are excited and pleased to provide you with information on our results for the third quarter that we just announced. My name is Bob Eulau, and I am Rambus' Chief Financial Officer. With me today are Geoff Tate, our CEO; and John Danforth, our General Counsel. In the first part of the call, Geoff will discuss our business results for the quarter, and then I'll provide a summary and analysis of the Company's recent financial results and an update on the litigation timeline. Afterward Geoff, John, and I will be available for you questions. The press release for the results discussed here today has been filed with SEC on Form 8-K. If you want a copy of the release, please visit our website at www.rambus.com on the investor relations page under financial releases. A replay of this conference call will be available for the next week at 800-642-1687. You can hear the replay by dialing the toll-free number, and then entering ID number, 1133935 when you hear the prompt. In addition, we are simultaneously webcasting this call, and it can be accessed on our website beginning at 5 p.m. Pacific time, today.

Before we begin, I need advise you that the discussion today will contain forward-looking statements regarding our financial prospects, pending litigation, and demand for our products, among other things. These statements are subject to risks and uncertainties which are more fully described in the press release and other documents that we file with SEC, including our 8-Ks, 10-Qs, and 10-Ks. And these statements may differ materially from our actual results. So now, Geoff will make some comments on the business.

Thanks, Bob, and good afternoon, everyone. I'd like to start out my comments by providing an update on the progress we've made in our logic interface business. This quarter represents our best ever for this new part of our business. I'm pleased to announce that we recognized our first production royalty on our serial link technology this quarter. This is important because, as some you of know, we started working the area of logic interfaces sometime ago to build upon the success we've had with our memory interface technologies. Now, we have 33 licenses for our serial link technology, and our engineering staff is focused on solving our licensees' challenging logic interface problems on all of these customer programs, which we hope to have move into production. On our last quarterly call, we announced our new relationship with Cadence. And since we last talked about it, I'd like the share that we have already closed our first deal from this strategic engagement. This is important because, although it is a small step in the process, the typical sales cycle takes time and we view this win as a positive sign of progress. We are also working with the Cadence sales force to get them trained in our technology, as well as our -- as various other joint marketing activities, such as regional design seminars and the joint demonstration of our PCI Express platforms at the recent Intel Developers Forum.

Switching gears, now, to our memory interface business. Over the past quarter, we have continued our momentum in this business area -- arena, particularly with the licensing agreement we signed with Matsushita. Matsushita, who is better known by many by their brand name, Panasonic, plans to incorporate our DDR2 physical interface technology into their next generation digital TVs. In addition to our DDR2 physical interface technology, Panasonic has also licensed our XDR interface technology. So there is a future design opportunity there as well. This customer milestone is important, because it showcases the value Rambus offers by providing a wide range of memory interface types, giving our customers access to what is needed today, as well as an upgrade path to future developments with higher performance.

I'd like the spend just a few minutes talking about the transition from DDR to DDR2 as well as the transition to higher speed versions of the graphics version of DDR, called GDDR, and all the engineering challenges that surround the transition to these higher-speed memory types. We are hearing from customers that they need more help with memory interfaces as the speeds of systems and chips continues to increase. Through our extensive experience in gigahertz-and-above range, we know the integrity of the signals and the systems can be severely jeopardized by running the links ever faster. We expect to see more chip and systems companies encountering the second and third order effects of high-speed signaling, which they have not experienced in slower speed system designs. Now, Rambus has been designing memory interfaces in much higher speed environments since our inception.  And through the years, our engineering teams have continued to push the speeds to make sure our customers challenging interface problems are solved. As the industry goes through the transition from DDR to DDR2, our engineers are poised to help the industry. We're doing this, in part, through a series of regional design seminars, to make sure the designers out there understand the tradeoffs and the signal integrity issues associated with bringing new memory designs to market. Now at these seminars and other customer meetings, we've heard from many of them how they have had problems doing their own DDR interfaces and are happy to see us offer a total solution for the even harder DDR2 and GDDR interfaces for their mission-critical designs.

Now I'd like to spend a few minutes discussing how we are planning to win in the area of foundry-based interface designs. Many of our designs are custom. Projects like we're engaged in with Sony and Toshiba are considered custom projects where the interfaces we design are on proprietary fabs and processes. In addition to customers needing custom designs like this, many also need high-quality designs on foundry processes like those offered by UMC and TSMC. As our range of PHYs increases, and the number of process variations increase, in order meet customer requirements, we need to increase our engineering capacity. Now the biggest talent pool of circuit designers for this type of work is right here in Silicon Valley, where we are headquartered. This is, and will remain, a great place for developing leading-edge technologies. But as we look to the need to grow our capacity and to become closer to our customers, we will expand our business engineering resources on more of a global scale.

We are pleased with initial results of our Chapel Hill, North Carolina design center, established at the start of this year. Having an office there greatly improves our ability to interact with and win more east-coast-based U.S. customers. However, the geographic region where we do the most business is Asia. We've done a great job of servicing our customers so far from California. But as our number of customers and our business continues to expand, we need to grow our capacity and get closer to our customers in Asia as well. All of this thinking leads us to supplement our existing engineering capacity with a design center -- center that we will open in Bangalore, India. We chose Bangalore as the site for our Rambus Asia design center for a number of reasons. First, Bangalore is in Asia, close to our customers there. Second, we have interest from some of our California-based employees who are originally from India to relocate back to Bangalore. Specifically, one of our key engineering managers will moving to Bangalore, and the whole operation in Bangalore will be managed, among other things, by one of our vice presidents, Samir Patel, who is originally from India. Third, there is a wealth of talent in the Bangalore area stemming from the great universities in the region. And fourth, it is cost effective in Bangalore, and we can have access to top engineering talent there. For all of these reasons, we will be opening the design center with a target of having it opened with 1 design team initially in place by the end of this year, and with plans to have capacity to add more design teams as our business growth requires in the future.

Now onto an update on some important internal developments, as well as things to come. In August, we welcomed Sharon Holt to Rambus as our Senior Vice President of Sales and Marketing. Sharon has a degree in electrical engineering and has achieve executive levels at Agilent, where she managed a group of nearly 100 people. She brings a wealth of knowledge, experience, and passion to the job. We're pleased to have Sharon as part of our executive management team to help augment our world-class technology position with world-class sales marketing. In early November, we will be hosting our Rambus Developer's Forum in Taipei. This is similar to the successful Rambus Developer's Forum we hosted during the summer in Japan. We are seeing more and more interest from our partners and customers in Taiwan. And they find great value in having many of our engineers and marketing people travel to Taipei for this forum to teach them how to design systems, chips, and processes using Rambus' many interface designs.

Also, we're preparing for our annual analyst meeting, which will be held on November 17th in New York City. We invite the financial analyst community to come here from our vice presidents Laura Stark and Kevin Donnelly, as well as Sharon Holt, Bob Eulau, John Danforth, and myself on what markets we're approaching, how we will win in these markets, and our strategies for success. We will also have a number of our product demonstrations there for a hands-on view of our business. Before I turn it over to Bob, I'd like to close by saying I'm very pleased with the progress we've made with our customer programs. And as we enter another area -- era by expanding into Bangalore, India, the momentum and support from our customers is driving our Company forward.

Thanks, Geoff. We are very pleased with our financial results this quarter because we achieved record revenue for the second straight quarter. Let me share some of the highlights with you. For the third quarter of 2004, our revenue was up 36% in comparison to the third quarter of 2003. Operating income was up 67% in comparison to the third quarter of 2003, while net income more than doubled over the third quarter of 2003. Net income benefited from a change in our tax rate, which I'll discuss more in a minute. Total costs and expenses grew more slowly than revenue at 27% over the third quarter of 2003. Cash flow generated from operating activities remained solid at $10 million. And during the quarter, we repurchased over a half million shares of our common stock as part of our ongoing long-term stock repurchase program. I'll discuss the balance sheet further in a few -- few minutes.

First, I'll give you additional information on revenue. Total revenue for the quarter was $38.8 million, up 36% over the third quarter of last year and up 11% on a sequential basis. Total royalties for the quarter were $30.5 million, up 24% over the third quarter of last year and up 3% sequentially. SDRAM and DDR royalties from memory devices and controllers were up 48% over the third quarter of last year and up 8% sequentially. If you exclude the Intel cross-licence agreement, the revenue from SDRAM and DDR memory and controller royalties comprised 45% of our revenue for the third quarter of 2004. One more update on royalties regarding serial links. As Geoff just mentioned, we did record our first serial link royalties this quarter, and a number of you have been asking about that for several quarters, so it's an excellent development for us.

Moving on to contract revenues. These revenues are a good indicator of the adoption of our newer technologies. Contract revenues were $8.3 million this quarter, up 107% over the third quarter of last year and up 55% from last quarter. The increase in contract revenues in the third quarter of 2004 over the third quarter of last year reflects the excellent progress we are making on XDR DRAM, Redwood, and RaSer contracts. Total costs and expenses for the third quarter were $28.1 million. This was up 3.8 million, or 15% from the previous quarter, and up 27% from the third quarter a year ago. Cost of litigation was up about 1.9 million, or 40%, from last quarter at 6.7 million, and up $2 million when compared to the third quarter last year. This reflects, among other things, preparation for the Infineon trial and increased discovery costs for the Hynix case. I will discuss both cases later. Operating expenses, excluding cost of litigation, were up 9% when compared to last quarter. And they were up 30 -- or I'm sorry, they were up 22% when compared to the third quarter of 2003, with the increase largely attributable to increased investment in the logic interface business, including the amortization of intangible assets from the patents themselves acquired from Velio Communications and Cadence.

Net income for the third quarter was $10.4 million, or 27% of revenues. This compares to 8.3 million in the previous quarter, and 5 million in the third quarter of last year. Net income in the third quarter was favorably impacted by a change in our tax rate. Taxes are inherently complex, but the easiest way to explain this is that we were able to benefit for tax purposes from capitalizing R&D on our tax returns. This allowed us to utilize foreign tax credits that we otherwise would only been able to deduct. Net income would have been 7.7 million if the tax rate had not changed from last quarter. Operating income was also strong, with an increase of 67% over the third quarter of last year. This continuing profitability led to good operating cash flow, which was $10 million for the quarter. Our cash, cash equivalents, short and long term marketable securities during the third quarter were $219 million, versus 232 million last quarter and 189 million as of December 2003. While this number is down 13 million from last quarter, we used $11 million in cash to acquire patents themselves from Cadence. We used $7.6 million in cash to repurchase our common stock, and 6.5 million was invested in property and equipment.

The share repurchase program is an ongoing, long-term program. I'd like to take a minute to reflect on how the long-term program has been doing. You may recall that our goal was to, at least, partially offset the dilution from our employee stock option program. Since the inception of the program, we have repurchased a total of 7.5 million shares. Over that time period, we had net option grants totaling 6 million shares. Our conclusion is, obviously, that the program is currently meeting our long-term goal.  Now, for the third quarter, repurchases totaled 503,000 shares. Our average purchase price per share for the quarter was $15.16. We have remaining authorization from the Board to repurchase up to an additional 2-1/2 million shares over and undefined period 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 102 million and diluted shares outstanding of 108 million.

Now I will give you some thoughts on what to expect in the fourth quarter of 2004. This guidance obviously has a lot of uncertainty associated with it, but it reflects our reasonable best guess at this point in time. And our actual results could differ materially from what I'm about to review. We estimate revenues to be in the range of 37 to $40 million, and that our operating costs and expenses will be in the range of 27 to $30 million. While we will be doing some modest hiring this quarter, we do not expect spending to change significantly in the next quarter. Litigation spending is always the most difficult to predict, because we do not control timelines and requests from the courts, nor do we control the actions that our adversaries may take, which may cause us to incur additional expenses in any particular quarter. Evidence that is produced in hearings can also cause us to change our plans. Based upon this, we estimate that our litigation expenses will be in the range of between 6 and $8 million. But this range is very dependent on the activity of our ongoing litigation. We're estimating that net interest and other income will be between 1.2 and $1.4 million. And finally, the tax rate is likely to be in the range of 25 to 27% next quarter, as we realize the benefit of the recently reinstated R&D tax credit in the U.S.

On the subject of litigation, I will update you on the results since the last earnings call and review the major items in our litigation timeline. Let me start with an update in the U.S. With respect to complaint from the Federal Trade Commission, we are in the midst of working on the appeals taken from the administrative law judge's decision last February, which was overwhelmingly in our favor. At the request of the FTC commissioners, both Rambus and FTC's attorneys delivered technical presentations on September 21st. Oral argument on the appeal is scheduled before the FTC commissioners on December 9th. Moving on to the private litigation. The Infineon case is now back in Virginia on remand following the January 2003 decision of the Federal Circuit Court of Appeals, which was favorable to us. A retrial of certain claims counterclaims in that case is scheduled to begin on February 10th, 2005, a date that was set this week and may change again. The trial is expected to last for 2 or 3 weeks. The trial currently includes our assertion that Infineon's SDRAM and DDR SDRAM products infringed 3 claims in 2 of our patents. Infineon has countered with multiple defenses and counterclaims, many of them newly asserted on remand.

Some of these newly asserted Infineon counterclaims attempt, among other things, to reopen arguments about JEDEC and our 1991 to 1995 participation in it. A major concern we have with these newly asserted Infineon counterclaims and certain Infineon defenses has been the extent to which the trial court on remand will be asked to retry issues related to JEDEC, or that that were otherwise foreclosed by prior proceedings. We continue to maintain that Infineon is not entitled to a do-over, and that these issues are outside the scope of what is left for the district court to decide. Because of these concerns we have sought what is called a writ of mandamus from appellate court to instruct the district court to limit the retrial. Our petition, therefore, seeks to bar Infineon from pursuing its 17200 monopoly and equitable estoppel arguments. The appellate court has asked Infineon to respond to this petition, which Infineon did several weeks ago, when briefing on the matter closed. To date, the appellate court has not yet ruled. The standard for obtaining such a writ is considerably higher than the standard review on an appeal following a trial. If this avenue is not fruitful, we believe we will have the same arguments on appeal, where we will face a lower burden to prevail.

Rambus had previously filed a petition for writ of mandamus related to the Virginia retrial. That earlier petition challenged the district court's May 18th pretrial order piercing our attorney-client and work-product privileges as they relate to the retention and collection of documents prior to first Infineon trial. That petition was denied, with 1 appellate court judge filing a strong dissent, and 2 majority judges stating that the privilege issue might be grounds for an appeal, but did not satisfy the much higher standards for a pretrial writ of mandamus. As a result of these developments, we have now produced to Infineon about 50 additional documents for which we had previously claimed privileged. Infineon is currently pursuing additional discovery from us and others based on these documents, and the trial court's May 18th rulings. After that will discovery, Infineon has indicated it will file a motion following up on the May 18th orders and seeking sanctions for document exfoliation. That motion is to be filed December 13th heard by the trial court on January 20. To accommodate this additional discovery and motion practice, the date for the Virginia trial has been pushed back to February 10th, 2005, as I indicated indicated before.

A second pending U.S. patent case, the litigation against Hynix, is now set for trial on January 24th. So, for the time being, the Hynix trial is set to occur just prior to the Infineon trial. In the Hynix case, however, the defendant has sought to delay the trial so that it will again follow Infineon. We have opposed that delay on the basis that, at the very least, the Hynix trial should be bifurcated with the patent case heard on schedule. There may be more information about the Hynix trial schedule tomorrow when our motion to bifurcate is set to be heard in San Jose. Also, we expect claim construction rulings shortly from the Hynix court based on comments by the court at our last status conference. In the third U.S. patent litigation, the one against Micron, we had a status conference last week at which a trial date was set for February 2006.

Moving on to Europe, on July 19th, 2004, an appellate division of the German Patent Office revoked our utility model. The written decision is not yet issued. After it does, we will have to assess whether an appeal to the German Federal Supreme Court is indicated. Also, following the EPO decision, we are in the process of tendering payments to Hynix and Micron for their legal fees, as required under applicable law to resolve the related litigations in the United Kingdom. These payments have been accrued for in the third quarter, and are another reason that litigation spending was high this quarter. In other litigation, on May 5th we filed an antitrust suit against Siemens, Infineon, Hynix, Micron, and a number of independent defendants alleging, among other claims, violation of a number of antitrust and unfair competition laws. On defendants' motion to change venue to Santa Clara County, the court conducted a hearing on October 5th to discuss the issue of whether venue was proper in San Francisco, where we filed the case. The court expressed a tentative ruling that the venue in San Francisco was proper, gave the parties until yesterday to file an additional briefing, and indicated it will rule on the venue issue in about another week. The court has scheduled a further case management conference for January 21st, 2005. We are now going the take questions and respond to some questions that have been sent to us during the quarter from shareholders. We could not address every question, but we will try the answer the most frequently asked questions. So, now, Operator, if you could open the lines up for questions?

At this time, I would like to remind everyone, if you would like to ask a question, press star, then the number 1 on the telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question is from Erach Desai with American Tech Research.

Good afternoon. Bob, first question is the sequential bump in contract revenues from about 5.3 million to, whatever, 8.3 million that you reported. Could you give a sense of what was incrementally perhaps new in there, and how does that -- this particular line item look forward -- look, going forward?

Yeah. That's a great question, Erach. And, obviously, we're very pleased with the contract revenue line this quarter. In terms of the sequential change, it was driven, both by our logic interface area, and by the XDR DRAM area. And it's kind of a combination of those 2 that led to the -- what is it? -- the $3 million -- $2.9 million change in contract revenues, sequentially. Now, going forward -- going forward, I think we may have hit a peak in contract revenue. I don't expect it to drop off significantly. But as you know, the XDR contracts are a percentage of completion. We've gotten quite a bit of work done on them at this point. And, as we said when we originally took on those contracts, we'd be working on them through the end of 2005. So, you know, we're making good progress, and, obviously, contract revenue is real good this quarter. I think it'll be very solid again next quarter, but perhaps down a little bit.

Just as a sort of follow on to that, there was a contract that you guys had in place with Sony, Toshiba combination, I believe. I don't think IBM is a official licensee in that. And that was sort of over time. When does that expire, if you can remind me, at least as far as that particular -- that, whatever, 28, $30 million contract.

Yeah. You're right, that was part of the original contract that we announced, I believe, in January of 2003. And we, at that time said it would be 3 years. And we expect to recognize revenue through the end of 2005 on that contract.

Thank you. And 1, sort of, different question. I just want to understand, you've mentioned that you spent $11 million in cash buying assets from Cadence. That transaction, does that appear in your P&L, or is that a -- is a balance sheet sort of transaction.

Yeah. Thank you for that question. So, as you may recall, we talked about the Cadence transaction in the last earnings call. But the cash payment was not due to them until this quarter. And so we paid out that cash this quarter. And you can see a pretty large increase in our purchased intangible assets on our balance sheet. And that's really what's driving it.

So in your assessment, I mean, it's not as if you're licensing, I don't know, CRM software or something like that? It's not a licensing fee that you recognize as an expense, it's an investment.

Correct, I mean, we purchase the patents and certain cells that Cadence had developed. And they're now a Rambus property.

Thank you for the clarification.

Okay. Thanks, Erach.

Your next question is from Mike Crawford with B. Riley & Company.

Could you break down the royalty revenue a little bit further into what is RDRAM? And if you could, directionally, and also, perhaps, what's driving the RDRAM royalties these days? is it mostly consumer electronics?

Okay. Yeah, I'll take a crack at that, Mike, and I, you know, we stopped talking a lot about RDRAM as the reality is it is less than 10% of our revenue now. But the you look at the year-over-year growth, in RDRAM, it was up about 6%, and it was driven, primarily, by consumer electronics. Obviously the flagship product continues to be the Sony PlayStation2, but the TI's DLP chipset is also using the RDRAM, and we've got chipsets that are used in digital TVs as well, that seem to be doing quite well. So it's a -- it's pretty stable, nice business. But it's less than 10% of our overall business right now.

Okay. And could you comment further on something you stated last quarter regarding the implementation of PCI Express in the physical layer, how you thought implementing the standard itself might infringe upon your IP. Does that extend to all serial link technologies, that belief?

This is John Danforth. I think I'm the one who made the comment the last quarter, and I apologize for the cold I'm talking through right now, but, I would say this, we believe that, certainly, there are certain implementations of PCI Express, and we're not prepared to yet whether all, but certain we'll read on our IP. We have not made a statement about all serial links reading on our IP.

Okay. Great. And then, on the civil litigation, do you know what -- when we're going to learn more about what the actual IFX, Infineon appeal -- or plea was in the criminal case? Because they pled guilty of what, to suppress and eliminate competition in the period from when RDRAM was slated to go into Intel's first chipset up to the point when -- when RDRAM went off the road map. So, I'm just curious if there'll be more filling in of blanks when we see their whole plea.

Mike, wait, I think you have the facts correctly. The information charging Infineon is a public document. And I think you've appropriately recited the facts, which are they plead guilty -- or wait, they've indicated that they will plead guilty to a charge of conspiring to eliminate competition. They've indicated that the period of the conspiracy is co-extensive with the period when RDRAM and DDR were in competition in the market. But they only indicate that period by the date. They don't give any further description. So the dates they gave, I believe, are sometime around June of 1999 up through June or July of 2002. Whether or not we're going to know more when the plea agreement is accepted, because you have to appear in court, change your plea from not guilty to guilty, and then be sentenced. Now whether or not we'll know more at that time is unclear to me, but we'll be paying attention to it. We expect that to happen on October 20th. And I think it's in San Francisco, in the United States District Court there. And I believe that the changing of the plea is in the morning, and the sentencing is in the afternoon.

Okay. And then after that occurs, are you going to try, then, to use, let's say, Infineon does, you know, plead guilty of doing this as expected, then that, you would think, would open up you to go back and get at their attorney-client privilege documents in your infringement litigation with them?

Well, I would prefer not to talk about future steps that we may or may not take following guilty plea.

Okay. Thank you.

Thanks, Mike.

Again, to ask a question, press star, 1 on the telephone keypad. The next question is from Michael Cohen with Pacific American Securities.

Yeah, John? I previously believe that you've spoken that you believe that you have additional patents in Europe other than the one that was disvalidated against Infineon. And I was wondering, is there any pending litigation regarding those out there?

Michael, yes there is. There is a case in Germany still pending, and I believe cases in other jurisdictions as well.

Okay. And has any of these been filed since the time of the disvalidation, or are these pre-existing?

They -- I believe they're all pre-existing, but at least in one case, we've added additional claims to an existing case.

Okay. I guess you wouldn't be willing to share whether you think you might be having additional suits going forward in the European venue?

You're right about that.

And I think that answers all my questions. Thank you.

Thank you. Bye-bye.

All right. Thanks, Mike. While some of you are thinking of others questions, we've got a couple of questions I'll ask John that came in from our shareholders. The first one is, for John, What steps has Rambus taken to ensure that what happened with your IP in the past will not happen again in the future with RaSer technology, Redwood technology, or XDR memory technology?

Sure. And let me just say our view of what happened to our IP in the past is that aspects of it were cherry-picked by our competitors and put in their designs. Our goal remains to design and develop leading interface designs that help solve our customers' symptom performance issues. We license these designs to the industry to allow them to incorporate our IP into their chips and systems. We are up front that we have a very strong patent portfolio. We have over 300 issued patents and over 300 currently pending. We remain confident in the strength of our portfolio, and we seek fair and due compensation for our inventions through the licensing program we have in place.

Okay. Thanks, John. Here's another for you. What are the expectations for the evidence collected by the DOJ against the DRAM manufacturers?

We hope and expect to have access to that evidence sometime in the current quarter. Obviously, some events are beyond our control, but we continue to watch developments within the DOJ investigation with great interest. It's interesting to note, as one of the questioners just asked, that the timeframe for which Infineon has just said it would plead guilty overlaps with the timeframe we've outlined in our own antitrust lawsuit, which is now in San Francisco Superior Court. Since we're not involved in the DOJ investigation directly, we cannot provide any definitive perspective on what is developing there. But it's of interest to us, and we continue to watch public developments.

Okay. Thanks, John. I'll take a question, here, from our shareholders. And it is if certain existing licensing agreements include contingencies for positive outcomes from litigation, how long would it take for such an increase to show up in an earnings call once it is triggered? So, every agreement, of course, is different and, obviously, we're subject to provisions regarding nondisclosure on these agreements, as well. But, while I can't put this into an actual schedule, I think it's probably safe to assume that our earnings would be favorably impacted within a quarter or 2 of the trigger event. So, I guess we'll do 1 more question in from our shareholders. And this one, I'll address to Geoff. And it is, has Rambus signed licenses for XDR or RaSer where you are contractually prohibited from announcing the specific licensee's name?

Hey, this is a great question, because it impacts Rambus' marketing efforts to some degree. In the example of XDR, I believe all of our contracts have been publicly announced, but in the case of RaSer, there are many contracts that we have that we've not able to disclose. Our customers have solid business reasons for not wanting an announcement and we must respect that. The most important thing is to get a solid stream of revenue coming in from the various design wins, whether they're announced or not.

Okay. Thanks, Geoff. At this point, it doesn't look like we have any more questions, so what I'd like to do is thank everybody for their questions today and for their ongoing interest in Rambus. We're very pleased with the results this quarter, and we look forward to updating all of you on our prospects in more detail in the analyst meeting on November 17th that Geoff mentioned. On the 17th, Geoff will open the NASDAQ market at 9:30 a.m. Eastern time. And we will be webcasting our analyst meeting to all our shareholders at 10:15 a.m. that same morning. So, thanks, everyone, and have a nice afternoon.

Thanks, all.

This concludes Rambus' third earnings conference call. You may now disconnect.