Satish Rishi - Senior Vice President and Chief Financial Officer Thomas Lavelle - Senior Vice President and General Counsel Sharon Holt - Senior Vice President and General Manager, Semiconductor Business Group Martin Scott - Senior Vice President and General Manager, New Business Group

Daniel Bretthauer - MDC Financial Research Hamed Khorsand - BWS Financial Philip Zera - Algorithm Capital

Good day, ladies and gentlemen and welcome to your Rambus Incorporated Q1 2012 Conference Call. (Operator Instructions) As a reminder today's conference is being recorded. I now would like to introduce your host for today, Satish Rishi.

Thank you, operator and welcome to Rambus’ first quarter 2012 conference call. I'm Satish Rishi, CFO, and on the call today are Tom Lavelle, our General Counsel; Sharon Holt, GM of the Semiconductor Business Group; and Martin Scott, Senior VP and General Manager of the New Business Group. Unfortunately, Harold is home ill with the flu and is unavailable to join us today. For today's call, I will cover Harold’s prepared remarks. But before I do so, I need to inform you that the press release for the results that will be discussed here today have been filed with the SEC on Form 8-K. A replay of this call will be available for the next week at 855-859-2056. You can hear the replay by dialing the toll-free number and then entering ID number 69256005 when you hear the prompt. In addition, we are simultaneously webcasting this call, along with the audio we'll be webcasting slides. So even if you're joining us via conference call, you may want to access the webcast for the slide presentation. A replay of this call can be accessed on our website beginning today at 5:00 p.m. Pacific Time. In an effort to provide greater clarity in our financials, we are using both GAAP and non-GAAP pro forma formats in our press release. I also need to advise you that the discussion today will contain forward-looking statements regarding our financial prospects, pending and current litigation, and demand for our technologies, among other things. These statements are subject to risks and uncertainties that are discussed during this call, which may be more fully described in the documents we file with the SEC, including our 8-Ks, 10-Qs and 10-Ks. These forward-looking statements may differ materially from our actual results and we are under no obligation to update these statements. Further, as mentioned, we will discuss non-GAAP financial results today and have posted on our website reconciliations of these non-GAAP financials to the most directly comparable GAAP measures. You can find a copy of our earnings release and the reconciliation on our website at www.rambus.com on the Investor Relations page. Now, I will go ahead with Harold’s prepared remarks. Overall, we had a strong first quarter with $62.9 million in revenue, which was towards the high end of our guidance. I will provide more detail on this in a few minutes. During the course of the quarter we signed two significant patent licenses agreements, NVIDIA and MediaTek. These license agreements are particularly important as they settle the outstanding ITC claims, as well as the individual district court cases with these parties. We have signed forward-looking license agreements with both companies which is obviously important for the future. While we had a setback in the ITC case, we are pleased to have resolved the differences with NVIDIA and MediaTek. Two other parties remain in the ongoing ITC case, in which we have filed a petition for review by the commission. A quick comment on the pricing fixing case in San Francisco. We have filed our notice of appeal. While we cannot predict how or when the appellate court will decide our appeal, we believe mistakes made during the trial require a reversal of the judgment. Tom will address questions later in the call. For now, we would share a few thoughts on where we are as a company. We are well positioned to build and develop the series of solutions and innovations that will enrich the experience of end-users around the world. We are in an ever-changing environment. Digitally connected devices, consumer demand and technological breakthroughs have all changed the world in which we do business. Historically, advances in semiconductor technology were the drivers for increases in functionality of consumer electronic devices. Today, consumer demand has become a force that is pushing us all to innovate faster and to drive greater functionality and requirements. This plays well into our strengths as inventors and as a company. We saw this trend emerge years ago and we adopted a strategy to diversify into businesses both within and beyond our traditional markets to meet the growing needs of consumers worldwide. And we continue to execute on this strategy. Our focus on innovation lies at the heart of who we are. We will continue developing into a company that can take advantage of technology disruptions in large markets. We believe in the strategy and it will continue to govern our actions. All of our businesses are driving rapid innovation and change, whether it is high performance, low power memory systems, highly efficient cost effective lighting and display solutions or across the broad spectrum of electronics that need to be secure. Innovations remain at the core of our company. Regarding our CEO search, Harold is working with the board to identify new CEO to lead our business forward to reach our full potential. The search for a new CEO is well underway with the board looking at both internal and external candidates. Now, a quick update on our business. On the semiconductor front we are delighted to welcome the Unity Semiconductor team to Rambus and we are very excited to have them onboard. Over the past several years, we have been studying the limits of current memory technologies and have been investigating a variety of potential successors, both within the DRAM markets as well as within flash. Memory will continue to be a large and growing market and will continue to be an area of focus for new technology development for Rambus. The resistive RAM technology Unity team has been creating called complex metal oxide or CMOX, is a promising successor for the current generation NAND technology. Its potential for scalability and low power has been key to attracting a development partner. While the technology is still in the development stage, we believe the Unity team, the technology and the underlying patent portfolio puts us in a good position in this space. Outside of the newly acquired technology, our semiconductor business is continuing to innovate across a number of key areas. As far as innovation, we ended the quarter with 1277 issued and 948 pending semiconductor based patents. In addition, our engineers celebrated receiving the prestigious Best Paper Award for this year’s DesignCon. Our winning paper was one of the ten papers we presented at the conference. And earlier this week, Rambus Fellow, Craig Hampel discussed the evolving landscape of computing and the demands this places on memory architecture at the GSA Memory Conference in Tokyo. Moving now to the new business group. We reached a milestone in the lighting and display technology division with GE Lighting shipping Rambus based lighting products into the market. We are seeing licensing success for our lighting technology beyond GE with the agreement recently signed with Fern Howard in Europe. In fact, just this week Fern Howard demonstrated several products based on innovations and designs at the Light plus Build trade show in Frankfurt. Our cryptography research division continues its educational campaign on security concerns of side channel attacks. Over the past quarter, the CRI team spoke at a variety of industry events including DesignCon and the RSA Conference. And there is a growing awareness among device manufacturers and even the public, about the importance of effective security. From a revenue perspective, the CRI team is on track for the plan and we look forward to sharing more details on the progress at the appropriate time. As is the case with the semiconductor business, the inventors in our New Business Group are continuing to advance their respective technologies forward. The NBG teams finished Q1 with 320 issued and 263 pending patents. Before reviewing the financials, there are a few additional items we wanted to address. The first is new term licenses. Despite the recent legal setbacks, we have been able to sign new licenses with SFE companies. To do so we have had to make a few compromises. The second item is our expectation for renewals starting in 2015. Over the past couple of years, we have invested through innovation as well as through acquisitions. The results of these investments is an evolving portfolio of technologies that can add value to our licensees. We believe we are building tremendous value as a result of a diversification strategy play out and we believe we will be in a stronger position moving forward. The third item I wanted to discuss is on the proposals in this year’s proxy. At our annual meeting of stockholders next week, we are seeking shareholder approval of the one time employee stock option exchange. As it is no doubt clear, our stock prices dropped significantly with the course of the past year. While our recurring revenue in face of signing license agreements has improved over the past year, the adverse court outcomes have had an impact on our stock price. As a result, roughly 97% of our employee stock options are under water. We are asking stockholders to allow us to exchange some of these under water options to a strike price of $14.50, which would vest over the course of three years. I do want to reiterate that this program is for our non-executive employee. We have historically granted stock options to employees to encourage them to act as owners of the company, which helps align their interests with those of our stockholders. This is an important program to help us retain our valuable employees. Now I will move on to the financials. As a reminder, we use non-GAAP or pro forma numbers which we believe are indicative of company performance as they include the impact of certain cash events and exclude certain non-cash and discrete events not indicative of a long-term performance. Customer licensing income is a non-GAAP measure that includes royalty related payments that we receive under assigned patent license agreements. It is how we measure the top line performance of our business and it may be different than revenues in a particular period when the amounts of cash received from patent license fees is different than the revenue recognized. For the quarter, as compared to our guidance we had a good quarter, with high CLI and lower manageable expenses. Customer licensing income was $65.3 million towards the high end of our guidance range of $61 million to $66 million. Pro forma expenses came in at $56.7 million, below our guidance of $57 million to $61 million driven primarily by lower litigation expenses. Pro forma pretax income was $5.6 million and pro forma net income was $3.6 million as compared to the guidance of a loss of $2 million and an income of $4 million. Customer licensing income for the quarter of $65.3 million was a decrease of 23% from the previous quarter and a decrease of 5% from the quarter a year ago. As you recall, we received a large payment from Broadcom in the fourth quarter of last year. This quarter included royalty payments received from MediaTek, our new licensee who we signed in Q1. Recurring CLI for the quarter was $63 million and one time or non-recurring revenue was $2 million. Pro forma operating expenses were $56.7 million, down 15% from the previous quarter. These pro forma expenses include litigation expenses of $4.1 million, down 76% quarter-over-quarter. Compared with the prior quarter and prior year ago, pro forma engineering expenses were higher by 7% and 33% respectively due to our continuing investments -- continued investments in CRI, our lighting division and the recent acquisition of Unity Semiconductor. MG&A expenses for the same periods were lower by 30% and relatively flat respectively, primarily driven by litigation expenses. Excluding litigation, MG&A was higher by $4.7 million as compared to the prior year and $1.1 million as compared to the prior quarter, driven primarily by additional headcount both organically as well as through acquisition of CRI and Unity. Pro forma interest and other expenses were $3 million, flat with the previous quarter and flat from the quarter a year ago. For pro forma tax expenses we are using a flat rate of 36% on pro forma pretax income. Based on that pro forma net income this quarter was $3.6 million, down 63% quarter-over-quarter and down 65% from a year ago. Overall cash, defined as cash, cash equivalents and marketable securities was at $233 million, a decrease of $57 million from the previous quarter and a decrease of $276 million year-over-year. During the quarter we spent $43 million for acquisitions which included about $31 million from Unity Semiconductor and $11 million for a couple of other acquisitions. Cash flow from operations was a negative $12 million for the quarter. The decrease from a year ago includes our acquisition of Cryptography Research Inc., Samsung’s exercise of the $100 million PUT option, offset in part by cash generated from operations. Now I will give you some thoughts regarding the second quarter. This guidance reflects our reasonable estimates and our actual results could differ materially for what I am about to review. For the second quarter we expect customer licensing income to be between $54 million and $60 million, and revenue to be between $53 million and $59 million. Let me provide some rationale behind these estimates. During the first quarter we entered a settlement and a five year patent agreement with NVIDIA and under these new agreements, quarterly payments are lower than the quarterly payments made under the prior EC license. Also our royalties from Samsung and Elpida are variable and they are a function of a customer’s revenue looking back two quarters. The DRAM market was soft in the second half of 2011 impacting our Q1 revenue and also is currently impacting our forecast for Q2 revenue. Elpida declared bankruptcy in February and is currently going through a reorganization. While there will remain uncertainty about our ability to receive payment during the pendency of the reorganization proceedings, based on the discussions with contacts at Elpida, we are optimistic that we will be paid in Q2. As such we have included the estimated payment under our patent license agreement in our guidance for Q2. That being said, we continue to be in negotiations with other licensees. The timing of these agreements is difficult to predict. We expect -- on the expenses side, we expect pro forma operating expenses which excludes stock-based comp, cost of restatements, retention costs and amortization and acquisition expenses to be between $57 million and $62 million. These amounts include an estimate for litigation expenses of $4 million to $7 million. Pro forma net income is expected to be between a loss of $6 million and breakeven. We are now ready to open the lines for Q&A. Operator, can you please open the lines?

(Operator Instructions) We will take our first question coming from Paul Coster from JPMorgan. Paul, please go ahead with your question.

Yeah, hi. It’s actually [Mark Straw] from behalf of Paul. If we can, can you just go back to these cases. So the ITC case, you have filed a petition for a review with the commission and then you have also appealed the anti-trust case. What should investors be thinking as far as timing their of when a decision could ultimately be made? Are we talking months, quarters, past this year even?

Well, there are two different answers to that, Mark. This is Tom Lavelle. With respect to the ITC case that we have we are having the commission reviewer asking for the commission to review, that we expect to be relatively quick like this summer is when we would expect the commission to make a determination as to whether the administrative law judge’s ruling was correct and whether they will support that ruling. Or overturn portions of it. With respect to the San Francisco price fixing case, very different question. I would expect that will be a year anyway before we get any real answer. We have filed a notice of appeal. We will be filing the actual briefing very shortly and that will take some time for both sides to brief and then to determine oral argument and then the oral argument and ultimately a ruling by the Court of Appeals in the State of California. Whatever happens there, whoever wins or loses that may very well go the California Supreme Court. So the San Francisco case could take a couple of years anyway to get to any real resolution from what the Jury did after the instructions from the judges.

Okay. And then the ruling on the -- from the PTO regarding the Barth One patent. I understand that doesn’t impact any of your existing agreements. But can you just talk about qualitatively what you are hearing this far or what you expect as far as negotiations going forward. I mean maybe discuss the MediaTek settlement. Maybe not an exact numbers but if on a percentage basis, how much lower that was then prior settlements because of this ruling, if any?

So, Mark, this is Sharon. I am not going to address the ruling, I will refer back to Tom for that. But just talking about the potential impact, the actual or potential impact on current agreements or ongoing negotiation. As Satish mentioned during the prepared remarks, we have a very large portfolio. And when we are negotiated with anybody for a license agreement, it’s really about all of the relevant patents and claims for the products that we’re licensing, not any one in particular. So in terms of negotiations going forward, we still have a very large portfolio which we are using in negotiations that are ongoing now and with respect to licenses that have already been taken by MediaTek or any others. I think I mentioned last quarter that we certainly --those negotiations are a big commitment not only for us but the folks on the other side of the table who agree to take the license. And then don’t do so lightly. We are certainly expecting people who have licenses with us to continue to pay under those licenses despite this particular decision from the PTO.

Okay, thanks. And then Satish, sorry, I might have missed this, but the portion of recurring CLI during the quarter of that $63 million. How much of that was from New Business Group? And a follow up to that is, do you still expect that to be approaching mid-teens by the end of the year or even for the full year?

Yes, we do. So the NBG group was about 13% of the total CLI this quarter. And we believe we are on track to get to about 15% by the end of the year.

And we will take our next question coming from Daniel Bretthauer from MDC Financial Research. Please go ahead. Daniel Bretthauer - MDC Financial Research: Hi, I have a couple of questions for Tom. Focusing on the anti-trust appeal first. It seems to me that the exclusion of the plea agreement for Samsung and Elpida during the trial might be an appealable issue. Are you aware that Judge Kramer recently clarified his prior ruling on this issue in the TESRA antitrust case?

I am sorry, in the TESRA case? Yeah, as you can imagine we are following the TESRA case. It’s a similar set of -- somewhat similar set of facts as our case. So, yes, we are following along with it. I am not going to specify which grounds that we are going to file our appeal on, but that you can imagine would be one we are very closely looking at as well as the rule of reason and a few other issues that we are looking at. But we haven’t filed the actual brief yet and I prefer not to make a comment until we have done that. Daniel Bretthauer - MDC Financial Research: Okay. Thank you. And then in the ITC investigation, the 753, can you comment on how ALJS’s final initial determination might affect the outstanding (inaudible) form Judge White and Judge Robinson?

I think it’s an interesting question. I don’t know that Judge Essex’s rulings will have any impact on either Judge Robinson or Judge White. Could it, one can only speculate on that answer. But each of Judges, White and Robinson had an opportunity to undertake a full trial in front of them, each of them. And my best estimate is they will make their rulings based on the evidence and the record that’s in front of them and their individual cases which is almost the same but there are some very slight differences. Daniel Bretthauer - MDC Financial Research: Okay. And then are you expecting anything else to be filed in those cases that might potentially hold up rulings from either of the judges?

I presume you are talking about the Micron Delaware and case and the San Jose Hynix cases. And if you are asking if we are filing anything out there, no, everything has been submitted in those two cases. We are waiting for rulings from judges Robinson and White.

Okay. Thank you. Our next question is from Hamed Khorsand from BWS Financial. Hamed Khorsand - BWS Financial: Hi, guys. Just a couple of questions here on the NVIDIA situation. With the settlement, does that mean you guys revoke the first settlement that you guys reached with them or the first license you guys reached with them.

Yeah, the new license overrode or basically replaced the original EC license. So the answer is yes. All of it was wrapped up into one settlement and license agreement that we are pursuing forward on now. Hamed Khorsand - BWS Financial: Okay. And if Elpida is bought out by a competitor who does not have a license with you, what happens there?

So there are a number of different scenarios that could happen there, Hamid. We certainly don’t want to speculate. I think I mentioned during the last call while not speaking specifically about the terms of agreement with Elpida that most of our license agreements do allow us the opportunity to terminate if there is a change of control. Obviously we are monitoring Elpida’s situation closely because any number of outcomes are possible. And there certainly could be some scenarios where if they were acquired we would want to actively negotiate with the acquiring party to come to mutually agreeable terms. But there are many different scenarios that could play out so I don’t want to speculate on anyone. Hamed Khorsand - BWS Financial: Okay. And then my last question is on -- just given the scope of the license agreements and the new patents versus the older patents. It almost sounds like you are putting very low value on the new patent portfolio based on these settlements. So just going forward what's the return on investment on all these patents you are being issued?

So I think maybe one thing that’s important to address is to talk a little bit about how we do our licensing because if we are talking just about a patent license not a technology license where we are delivering designs or other services to the company. We take a look at our patent portfolio and the relevant products that we are licensing. And what the customer is actually paying us in those type of licenses or just the relevant patents and claims for a particular set of products. And so for any given customer, depending on what products they are shipping that are covered by the license, the value is very unique to that customer based on the kinds of products that they have and what's being asked to be covered by the license. So while, in Satish’s prepared remarks he talked about his making compromises and certainly we have had to make compromises as we have not fared as well as we would have liked in some of the recent litigation. That has an effect on our negotiating position but it is not the only thing that has an effect. We also have to look at what's actually happening with the customer’s products. There product offering today as well as over the future period for the license and price it accordingly. Hamed Khorsand - BWS Financial: No, I understand that but you are talking about value to the customer but how about value to the shareholders and the company though. I mean every quarter you are saying more and more patents are issued but then again you are issuing revenue guidance that’s lower or not profitable. I am just stuck here trying to figure out where is the cash flow, where is the return on investment?

Yeah, Hamed, let me address that. So the patents that we are -- the increasing patent portfolio we have, not all of it is monetizable today because many of these patents and the technologies have not even gotten to the point where those patents are useful today. So we are building a patent portfolio for the future. And as Sharon mentioned we have had to make a few compromises because of the litigation issues we had. But that is for the existing products that have been shipped. We continue to look forward and I disagree with you that we are not putting value or we are putting low value in the future patents. All of these agreements have a terms and the renewal that comes about and at that point in time depending on the patents we have today, our expectation is that with the intersection of the technology in future and that’s where we would be able to monetize those patents at that point in time.

Okay. Thank you. And we will take our next question from Philip Zera from Algorithm Capital. Please go ahead. Philip Zera - Algorithm Capital: Yes, my first question is on the guidance for the second quarter specifically the litigation expense. Could you repeat that again, please, your estimates?

Sure. The litigation expense was $4 million to $7 million. Philip Zera - Algorithm Capital: That’s your guidance for the second quarter?

Right. Philip Zera - Algorithm Capital: And what was it again in the first quarter?

About $4 million. Philip Zera - Algorithm Capital: I am sorry, how much?

Four. Philip Zera - Algorithm Capital: So it’s gone from 4 to 47?

No, no, 4 to 7. In the range of $4 million to $7 million. Philip Zera - Algorithm Capital: And it peaked, is it safe to say it peaked in the fourth quarter?

Yes, it did. Philip Zera - Algorithm Capital: Okay.

At about $16 million. Philip Zera - Algorithm Capital: Okay. And I could use out a little color on this $7 million estimate. Where that would be coming from?

Well, we spend about $4 million in the current quarter so the litigation expenses are really based on how any of these cases progress. So if we -- as we file the brief if there is some action to be taken as we engage more lawyers. So it’s really difficult to predict exactly what it’s going to be, so we typically give a range of $3 million to $4 million on a litigation expenses. Philip Zera - Algorithm Capital: Okay. And my other question regarding the proxy, the proposed price or revised or reduced price of the options is 14.5? Correct?

That is correct. Philip Zera - Algorithm Capital: Do you have an average where the current options are at or is it just varied considerably?

They vary considerably, but at the current price or even at $7 or $8, about 97% of them would be under water.

Okay. Thank you ladies and gentlemen for your questions. I would now like to turn the conference back to your host Satish Rishi.

Thank you, John. Thank you all for your continued interest and support. We look forward to seeing many of you at our annual meeting of stockholders next week. Thank you.

Okay. Ladies and gentlemen this does conclude your conference. You many now disconnect and have a great day.