Rambus last week reported financial results for its second fiscal quarter ended March 31, 2003. The company reported higher sequential and annual sales, but lower earnings for the described period.

Revenue for the quarter was $28.1 million, up 19% over the same period last year and up 9% from the previous quarter. Earnings per share for the quarter were 5 cents, compared to 7 cents in the same period last year and 6 cents in the previous quarter. Net income for the March quarter was $5.1 million, compared to $6.7 million in the same period last year and $5.5 million in the previous quarter.

March quarter results reflect $3.3 million in contract revenue, up 90% over the same period last year and up 137% from the previous quarter. This increase in contract revenue primarily reflects the contracts signed recently for Yellowstone and Redwood technology. March quarter results include $24.8 million in royalties, up 14% over the same period last year and up 2% from the previous quarter. Royalties were up primarily due to DDR SDRAM memories and SDRAM memory controllers.

Total costs and expenses in the March quarter increased $4.7 million from last quarter primarily as a result of an increase in litigation costs, an increase in investment in research and development and an increase in the cost of contract revenue. The increase in litigation costs was driven primarily by costs associated with preparing for the upcoming trial with the Federal Trade Commission. The increases in research and development and the cost of contract revenue are driven by the investment required to meet the milestones on the contracts signed for Yellowstone and Redwood. Total costs and expenses were $23.6 million versus $18.9 million last quarter and $14.8 million in the comparable period last year.

We can figure out once again that most of Rambus’ earnings are received from DRAM memory makers who are basically forced to pay the fees. In case under any circumstances they cease to pay the royalties, Rambus will go bankrupt.