Satish Rishi - Sr. VP and CFO Harold Hughes - President and CEO

Good day everyone and welcome to this Rambus Inc. quarterly conference call. Today's call is being recorded. At this time I'd like to turn the call over to Mr. Satish Rishi, please go ahead sir. Satish Rishi - Senior Vice President and Chief Financial Officer: Thank you operator and welcome to Rambus' fourth quarter and year-end 2007 conference call. I'm Satish Rishi, Chief Financial Officer and with me today are Harold Hughes, our President and CEO and Sharon Holt, Senior VP of Sales, Licensing, and Marketing. Tom Lavelle will not be joining us today as he is attending the opening arguments that are taking place as we speak in the case in San Jose. The press release for the results that will be discussed here today have been filed with the SEC on Form 8-K, if you want a copy of the release please visit our website at www.rambus.com on the investor relations page under financial releases. A replay of this conference call will be available for the next week at 888-203-1112. You can hear the replay by dialing the toll free number and then entering ID number 7774674 when you hear the prompt. In addition we are simultaneously webcasting this call and a replay can be accessed on our website beginning today at 5.00 PM EDT. Before I begin I need to advise you that the discussion today will contain forward-looking statements regarding our financial prospects, pending litigation, and demand for our products among other things. These statements are subject to risks and uncertainties, which are more fully described in the documents we filed with the SEC including our 8-Ks, 10-Qs, and 10-Ks. These forward-looking statements may differ materially from our actual results. Now I'll turn the call over to Harold. Harold. Harold Hughes - President and Chief Executive Officer: Thanks, Satish and good afternoon everyone. Flexing on 2007 we faced a number of extraordinary challenges, talked about these challenges extensively in past calls. We entered 2007 having received the FTC's liability findings but still awaiting their remedy order. Further, at that point we were neck deep into the restatement and the independent investigation was in full swing. We now enter 2008 with the investigation closed, the restatement completed, and the enormous amount of work required to comply with the FTC's remedy order largely behind us. This puts us on a much stronger footing than we were a year ago. In addition, we are making good progress on our strategy of focusing on four key markets, computing, gaming, HDTV and mobile, as was demonstrated by the accomplishments... by our accomplishments in the fourth quarter. First, back in November, we announced that Intel has signed a memorandum of understanding to evaluate the XDR Memory Architecture and its state of the art process technology. This is an opportunity for us to showcase the value of our advanced memory solution to Intel and we hope this leads to further engagements with them. Both companies have dedicated resources to this evaluation project and we are excited with the prospects of working closely with the Intel design team. Also during the quarter, we announced the signing our first HDTV deal for XDR with Toshiba. Again it's an opportunity to showcase the benefits of the XDR Architecture. Better [ph] compute functionality is being integrated into HDTVs to deliver increasingly rich set of features, thus resulting in more semiconductor content. IDC estimates that the semiconductor shipments into HDTVs will reach $6.9 billion this year, which compares favorably with the $7.5 billion of semiconductors going into the gaming market. HDTV manufacturers are looking for high performance at low costs in order to provide advanced features at aggressive price points. XDR is a great solution that delivers the needed bandwidth in the fewest devices. Another exciting development was the announcement by Qimonda that it began shipping samples of [inaudible] Gigabit XDR DRAM. This is an important milestone, as it’s just one year ago when we announced Qimonda's license for XDR and now thank to our aggressive implementation plan Qimonda has begun shipping samples. This speaks not only to Qimonda's commitment to XDR product, but the growing customer pool for XDR bandwidth capacity, XDR's high bandwidth capacities. With Qimonda's announcement, XDR customers can be assured of a growing supply-based for our leadership product. There were a number of interesting developments during the Consumer Electronic Show in January. Warner Brothers that has been releasing film and both Blu-Ray and HDDVD announced it will now release exclusively in the Blu-Ray format. The fact that Sony shipped 1.2 million PS3s in North America during the holiday season, a number greater than the entire install base of HDDVD players has not been lost on the studios. Having more films available exclusively on Blu-Ray certainly bodes well for the sale of PS3s... more PS3s. And for us it's obviously a virtuous cycle. Also at CIS, Toshiba's Spurs Engine was on display with XDR DRAM. Spurs Engine is a high-performance screen processor derived from the Cell Broadband Engine and integrates four of the Cell BE's high performance risk course with hardware dedicated to decoding and encoding MPEG-2 and H.264 video. It uses XDR memory to achieve the high data transfer rates for amazingly rich media performance. With growing shipments of the PS3 and the introduction of Spurs Engine, we are seeing increased traction for our leadership XDR memory architecture in the market. At the heart of Rambus is our engineering talents and passion for innovation. Our engineers continue to advance the state-of-the-art and in November, we introduced groundbreaking innovations as part of our Terabyte Bandwidth Initiative. In this initiative, we demonstrated three new memory-signaling technologies that facilitate blazingly fast data rates. These technologies will ultimately enable on memory architecture that can deliver an unprecedented terabyte per second memory bandwidth. The three innovations announced were 32X Data Rate, enabling 32 bits of data per clock cycle, fully differential memory architecture, the industry first implementation of differential signaling, both data and command and address and FlexLink Command/Address, which is the industry's first full-speed, point-to-point command/address link. We have demonstrated these key innovations in Silicon, not in PowerPoint at our Rambus Developer Forum in Japan and will feature these demonstrations next week at DesigCon in Santa Clara. Speaking of innovation, our engineers and scientists continue to invent and develop technologies for advanced memory architectures, high-speed logic interfaces and low power interface solutions. One measure of the pace of innovation at Rambus is our growing patent portfolio, which at the end of the year stood at 684 issued patents and another 539 applications pending. It's through this continued commitment to innovation that we can deliver extraordinary value to our customers, enable breakthrough products and enrich the lives of consumers. Looking forward to 2008, we are committed to the continued development of innovation, which leads the industry, such as our recently announced Terabyte Bandwidth initiative. Further, we will continue to drive the adoption of our leadership XDR memory architecture into our focus markets, and we will reenergize the licensing of our world-class portfolio of patented innovations. As Satish mentioned, Thomas in court today, attending the opening arguments of the latest phase of the Hynix trial before Judge White. Micron and Nanya are also parties to this phase. Since the trial is in progress, we will limit today's legal update to look out on upcoming calendar of events. As... also before Judge White is the Markman hearing, pertaining to additional patent claims scheduled for March 24th and 25th. Regarding our appeal of the FTC order, there is a hearing before the DC circuit court scheduled for Valentine's Day, February 14th. Finally, the next case management conference in the price fixing case before judge Kramer in San Francisco is scheduled for February 8th, and with that, I'll turn the call over to Satish to review the financials. Satish? Satish Rishi - Senior Vice President and Chief Financial Officer: Thank you, Harold. As reflected in our press release today, we finished Q4 '07 with revenues of $40.5 million, down 3% from the previous quarter, and down 23% from the year-ago quarter. We closed 2007 with full year revenues of $180 million, down 8% from the previous year. As we've outlined in the past, the decrease in revenue was primarily due to the direct and indirect impact of the FTC orders and a scheduled decrease in patent royalty payments. Operating expenses for the fourth quarter were $72.6 million, up 25% from the previous quarter, and up 36% from the fourth quarter of last year. For the full year, operating expenses were up 6%. These operating expenses include stock-based compensation and expenses related to restatements in both years, IRS 409-A related payments made in early 2007, some severance payments in 2007, and a bonus paid to a law firm in mid 2006. To provide a better comparison period over period, I'm including expenses related to these activities on my discussion. So, excluding stock-based compensation, restatement expenses, severance, and other adjusting items, operating expenses in this quarter at $52.3 million were up 16% from the previous quarter, and 38% from the quarter year-ago. The primary driver for this was higher litigation expense. For the year, adjusted operating expenses at $175.7 million were up 15% over the prior year. The increase was due to higher SG&A, including higher general litigation, audit and accounting costs, as well as higher engineering associated with an ongoing program, we increased our investment in core technology development and leadership products. Since litigation expense is one of the major drivers of the increase in expenses, let me provide some additional color on litigation costs. For the quarter, costs related to general litigation was $16.1 million, up 37%, as compared to the third quarter of 2007, and up 209% from the fourth quarter of last year. Given all the pending cases, our legal teams have been busy. We view our spending on litigation as an essential part of our strategy to defend our intellectual property. However, the timeline for the cases is difficult to predict and each case, as you know, has its twist and turns. This explains why in the first half of the year litigation expense was about $11.7 million and for the second half it was more than double at $27.8 Million. For the full year, we incurred litigation expenses of 39.5 million, up 37% from the prior year. Our adjusted operating loss for the quarter was $11.1 million, an increase of $8.5 million from the previous quarter and a change from a profit from the fourth quarter of 2006. For the full year, our adjusted operating income of $4.2 million was down 90% from the prior year. Overall, cash, defined as cash, cash equivalents and marketable securities, excluding restricted cash was $441 million [ph], a decrease of approximately $4 million from the third quarter of 2007 and up $5 million from a year ago. Now I will give you some thoughts regarding the first quarter guidance. This guidance reflects our reasonable estimate and our actual results could differ materially from what I am about to review. We expect first quarter revenue to be between $35 million and $40 million. This is our conservative estimate and does not include the impact of any one-time licensing deal that we may sign during the quarter. We expect operating expenses excluding stock-base compensation to be between $50 million and $58 million. Litigation expense are difficult to predict because we do not control timeline and request from the court nor do we control the action that advisories may take, which may cause us to incur additional unplanned expense at any particular quarter. Included in the range of operating expense I just gave you, our general litigation expenses of between $12 million to $18 million, a wide range given the level of activity predicted this quarter. That concludes our prepared remarks. Operator, would you please open the call for questions? Question and Answer

Yes, sir. [Operator instruction] Our first question comes from Tore Svanberg from Thomas Weisel Partners. Harold Hughes - President and Chief Executive Officer: I can see from the number of questions that many of likely questionnaires are in court as we speak. So, let's call the call to an end if we might. Thank you. Satish Rishi - Senior Vice President and Chief Financial Officer: Thank you all for your involvement in the call. At this point, since there are no question. Operator, we will end the call. Thank you.

Thank you sir. This does conclude today's conference call. We appreciate your participation. You may disconnect at this time.