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Rambus Inc has a market cap of $528.8 million; its shares were traded at around $5.11 with and P/S ratio of 1.7.
Highlight of Business Operations:We have a high degree of revenue concentration, with our top five licensees for each reporting period representing approximately 74% of our revenue for the three months ended March 31, 2012 and 2011. As a result of our license agreement with Samsung in 2010, Samsung is expected to account for a significant portion of our ongoing licensing revenue. For the three months ended March 31, 2012, revenue from NVIDIA, Renesas and Samsung each accounted for 10% or more of our total revenue. For the three months ended March 31, 2011, revenue from Elpida, NVIDIA, Samsung and Toshiba accounted for 10% or more of our total revenue. We expect to continue to experience significant revenue concentration for the foreseeable future.
Our revenue from companies headquartered outside of the United States accounted for approximately 74% and 78% of our total revenue for the three months ended March 31, 2012 and 2011, respectively. We expect that revenue derived from international licensees will continue to represent a significant portion of our total revenue in the future. To date, all of the revenue from international licensees have been denominated in U.S. dollars. However, to the extent that such licensees’ sales to their customers are not denominated in U.S. dollars, any royalties that we receive as a result of such sales could be subject to fluctuations in currency exchange rates. In addition, if the effective price of licensed semiconductors sold by our foreign licensees were to increase as a result of fluctuations in the exchange rate of the relevant currencies, demand for licensed semiconductors could fall, which in turn would reduce our royalties. We do not use financial instruments to hedge foreign exchange rate risk.
Marketing, general and administrative expenses in the aggregate and as a percentage of revenue increased for the three months ended March 31, 2012 as compared to the same period in the prior year. Historically, we have been involved in litigation stemming from the unlicensed use of our inventions. Our litigation expenses have been high and difficult to predict and future litigation expenses could be significant, volatile and difficult to predict. If we are successful in the litigation and/or related licensing, our revenue could be substantially higher in the future; if we are unsuccessful, our revenue may not grow or may decrease. Furthermore, our success in litigation matters pending before courts and regulatory bodies that relate to our intellectual property rights have impacted and will likely continue to impact our ability and the terms upon which we are able to negotiate new or renegotiate existing licenses for our technology. We expect to continue to pursue litigation against those companies that have infringed our patented technologies, which in turn will cause litigation expenses to remain significant until such litigation is resolved.
Our patent royalties increased approximately $6.7 million to $57.7 million for the three months ended March 31, 2012 from $51.0 million for the same period in 2011. The increase was primarily due to complete allocation of Samsung’s quarterly license payment to revenue since the second quarter of 2011 and revenue recognized from various new patent license agreements signed in the past year as well as patent license agreements acquired from the CRI acquisition, offset by lower royalties reported by certain licensees and expiration of a patent license agreement in the second quarter of 2011.
Contract revenue decreased $2.5 million to $0.8 million for the three months ended March 31, 2012 from $3.3 million for the same period in 2011. The decrease was primarily due to the absence of new technology development contracts in the first quarter of 2012.
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