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Why Is Rambus (RMBS) Stock Surging Today?

June 16, 2021 11:51 am
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Why Is Rambus (RMBS) Stock Surging Today?
  • Rambus Inc (NASDAQ:RMBSinitiated an accelerated share buyback program with Deutsche Bank AG (NYSE:DB) through Deutsche Bank Securities Inc to repurchase $100 million shares with an initial delivery of 4 million shares.
  • The program is part of the 20 million share buyback program previously authorized by the Rambus board in Oct. 2020.
  • Rambus also reiterated its Q2 FY21 guidance issued on May 3, 2021, which included Licensing billings between $60 million – $66 million, Product revenue between $30 million – $36 million, and contract and other revenue between $8 million – $14 million.
  • Rambus recently reported first-quarter FY21 revenue of $70.4 million and EPS of $(0.2) at the high end of the company’s expectations. The revenue included licensing billings $63.5 million, product revenue of $30.8 million, and contract and other revenue of $10.7 million. It generated $39.5 million operating cash flow. The company held $529.1 million in cash and equivalents.
  • Separately, Rambus announced the CXL Memory Interconnect Initiative to develop semiconductor solutions for advanced data center architectures that maximize performance, improve efficiency and reduce system cost.
  • Additionally, Rambus agreed to acquire Compute Express Link (CXL) and PCI Express (PCIe) digital solutions provider PLDA.
  • CXL and PCIe will be critical enablers for the next-generation data centers, delivering the high-speed interconnects between processors, accelerators, memory, and network devices required to tackle AI/ML and HPC application workloads.
  • The arrangement will assist Rambus in driving its mission-critical interconnect chips and IP solutions for the future data center.
  • Rambus also inked an agreement to acquire low-power multi-standard connectivity SerDes IP solutions provider AnalogX.
  • The PHYs and DSP design expertise from AnalogX will feed Rambus’ roadmap for data center interconnect chips and expand reach to new applications across data center, AI/ML, and 5G.
  • The financial terms of both the acquisitions remain undisclosed. Rambus expects the acquisitions to be accretive in 2022.
  • The acquisitions enhanced Rambus’ roadmap for PCIe 6.0 and CXL 3.0 solutions and provided critical building blocks for the CXL Memory Interconnect Initiative.
  • Price action: RMBS shares traded higher by 6.18% at $21.52 on the last check Wednesday.

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