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Hindsight, Fujitsu and AMD, and the BOD’s Opportunity NowMy three Capstone-inspired posts over the weekend stirred up debate on many fronts. One post yesterday noted that my three posts appeared to be partly directed to the Rambus BOD. http://investorvillage.com/smbd.asp?mb=3666&mn=409949&pt=msg&mid=7686068. That is correct. It is an excellent time to hire new managers when the track record of the current management team is fairly clear, when the stock price is still relatively low, and when events on the horizon seem to promise very significant gains. See http://www.investorvillage.com/smbd.asp?mb=3666&mn=397988&pt=msg&mid=7502495. (I gave this same practical – non-legal—business advice to the Rambus CEO himself in late 2005 and early 2006, when it became increasingly apparent that he would want to find a new GC.) Some have argued that much of what I wrote over the weekend is “hindsight.” First, there is nothing intrinsically wrong with “hindsight.” That is what we often use to judge employee performance. Also, the “hindsight” assertion is not true in at least one critical respect. The issues I addressed in my three “Capstone” posts (about, among other things, corporate focus and identity) are old issues with ongoing importance. They directly shape (and have long directly shaped) the conduct of Rambus business. Rambus’s licensing productivity (or lack thereof) is a key case in point. Since late 2005, there have been only two announced Rambus
deals that seem to have generated significant Rambus revenue: Fujitsu and Regarding Fujitsu, in an earlier post I briefly described my role and it is (frankly) hard to see that deal as an endorsement of the efficacy (or vision) of current management. See http://www.investorvillage.com/smbd.asp?mb=3666&mn=366422&pt=msg&mid=7008085 Others have (perhaps inevitably) taken a different view. The CEO’s wife, Nancy Hughes (writing here as “clarissamehitable”), for example, strongly defended her husband’s late 2005 restructuring of the Rambus licensing group (when he had the licensing lawyers report to sales), writing here in response to a quoted comment (set off by “>> <<”) from “Owner of Business:” >>My larger point is that
there are dozens upon dozens of companies who are using our IP, who aren't
FELONs and aren't hard core Rambus opponents. These dozens upon dozens of
infringers should be licensed right now. I think 'the carrot and the stick', or
'the collaborative approach', might work very well for this set of infringers.
Just look at the Fujitsu deal. That came out of nowhere and it is worth about
$178 million. There are more to be done and I want to see progress. I want a
deal on the XBox 360 or in the alternative I need to be told how we are in fact
being compensated. It is all about the TAM, you know....<< Here again is Mrs. Hughes -- commenting on me, licensing, the use of carrots and sticks, and her husband’s 2005 restructuring of the licensing function: http://investorvillage.com/smbd.asp?mb=3666&mn=10751&pt=msg&mid=246773. Finally, in terms of the steps that I think the BOD ought now to take given these issues and mangement’s track record, it is also useful to review the other major deal of the last three-plus years: AMD. When first announced in early 2006 by Rambus (with great
fanfare) the http://investorvillage.com/smbd.asp?mb=3666&mn=69135&pt=msg&mid=1607506. Over a year later, Rambus management finally took responsibility
for this problem in the ... but I'm glad she did. She's
very good at these CC's, and probably provides more bang for the buck than the
rest of 'our' management. She'd be the last to go if I were in charge of house
cleaning. Kudo's to Michael Cohen for his aggressive questioning. Per Sharon,
Rambus Inc. did not anticipate the AMD aquisition of ATI. All past, present,
and future ATI products are completely covered by the AND / Rambus contract. These concerns about Thank you to those who have read this far. I greatly appreciate your patience with what may, at first, simply appear to be old issues. I don’t think they are. Nor do I think that these are simply issues about corporate communications, or issues that can be brushed aside with accusations of “hindsight.” And I don’t, in any event, think that there ought to be a bar on some reasonable use of hindsight in this context. None of this diminishes my appreciation for what the legal team has accomplished (and for what I hope and expect them to accomplish in the next few months). Best wishes, John Danforth (Written solely on my own behalf) |
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