Rambus loses antitrust lawsuit, shares plunge

SAN FRANCISCO Wed Nov 16, 2011 4:29pm EST

Hynix Semiconductor manufactured 2 GB DDR3 1333 MHz U-DIMM' memory modules displayed at the company's Seoul office July 22, 2010.  REUTERS/Jo Yong-Hak

Hynix Semiconductor manufactured 2 GB DDR3 1333 MHz U-DIMM' memory modules displayed at the company's Seoul office July 22, 2010.

Credit: Reuters/Jo Yong-Hak

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SAN FRANCISCO (Reuters) - Rambus Inc lost a $4 billion antitrust lawsuit against Micron Technology Inc and Hynix Semiconductor Inc, erasing more than half of the chipmaker's value as investors abandoned its stock.

The verdict, which sent Rambus shares tumbling by 60.6 percent and boosted those of Micron by 23.4 percent, came on Wednesday after a three-month trial in state court and more than eight weeks of jury deliberations.

Rambus attorneys argued that South Korea's Hynix and Idaho-based Micron colluded to fix prices of memory chips used in personal computers and to prevent Rambus technology from becoming widely used. Rambus claimed the collusion cost it up to $4.38 billion in lost profits.

Micron and Hynix countered that Rambus's chip technology was plagued by technical problems and that the company blamed competitors for its own failure.

"Hynix is very pleased with the outcome. Clearly Rambus is not able to prove its allegations. There was no conspiracy," said Ken Nissly, a Hynix lawyer.

Rambus Chief Executive Harold Hughes said he was reviewing options for appeal.

"We do not agree with several rulings that affected how this case was presented to the jury," Hughes said in a statement.

A large award could have dramatically changed the fortunes of Rambus, which had a stock market value of about $2 billion before the verdict was announced.

YEARS OF BATTLES

Much of Rambus' income comes from litigating to defend its patents, and many investors had followed years of court battles and bet on the antitrust trial.

"I've followed it for 10 years now and we've really seen nothing in terms of capturing the value that's been lost. That was the whole reason for owning the stock," said Capstone Investments' Jeff Schreiner, one of a handful of financial analysts who have closely covered Rambus' legal saga.

"We don't believe there's a lot to appeal, and we're not going to stick around," he said.

Rambus has run up more than $300 million in legal bills since it was founded in 1990, equivalent to $1 million per employee, as it sued the biggest names in the business for infringing some of its more than 1,000 patents.

It has a separate patent case ongoing against Micron and Hynix, and another against graphics chipmaker Nvidia.

Last year, Rambus settled antitrust claims against Samsung Electronics Co Ltd in a deal worth up to $900 million to Rambus.

On Wednesday, three-fourths of the jurors sided with Micron and Hynix and against Rambus, according to a poll of the jurors by the judge.

Rambus shares ended trading on Wednesday at $7.11 on the Nasdaq, while shares of Micron finished at $6.74, also on the Nasdaq.

The case in Superior Court of the State of California, County of San Francisco is Rambus Inc. v. Micron Technology Inc. et al, 04-431105.

(Additional reporting by Ronnie Cohen; Editing by Lisa Von Ahn, Gerald E. McCormick and Steve Orlofsky)

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