Good day, ladies and gentlemen, and welcome to the Rambus Inc. Third Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Satish Rishi, Chief Financial Officer. Sir, you may begin.

Thank you, Amada and welcome to the Rambus third quarter 2015 results conference call. I'm Satish Rishi, CFO and on the call with me today is Dr. Ron Black, our President and CEO. The press release for the results that will be discussed here today has been furnished to 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 55741229 when you hear the prompt. In addition, we are simultaneously webcasting this call, and along with the audio, we're 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're using both GAAP and non-GAAP pro forma format in our press release and also on this call. I need to advise you that the discussion today will contain forward-looking statements regarding our financial guidance prospects, our product strategies, demand for our technologies and restructuring and plan of termination among other things. These statements are subject to risks and uncertainties that are discussed during this call and 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 Web site 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 Web site at rambus.com on the Investor Relations page under Financial Releases. Now, I'll turn the call over to Ron to provide an overview of the quarter. Ron?

Thanks Satish, and good afternoon, everyone. We finished the quarter with revenue of $73.8 million which was within the guidance we provided. We continue to manage expenses carefully and have again ended the quarter with expenses at the low end of what we expected, so pro forma net income came in at $17 million which is closed to midpoint of our guidance. While we had another decent quarter, I'm disappointed to report that we have recently had two setbacks in our business. The first is that one of the larger more complexed licensing and broad partnership agreements we were negotiating in our security business has stalled and at this point we are unlikely to see it close. As well we had other smaller deals on the funnel throughout our business that didn’t come to fruition. Given the changes we are seeing in the broad macroeconomic environment in the semiconductor industry particularly with consolidation and restructuring it is taking longer than anticipated to close deals. While this larger deal or other deals could still materialize, we are taking a cautious and conservative approach as we work to set guidance expectations into next year which Satish will provide in a few moments. Given where we are today, however, with these deals we are revising our full-year guidance to $291 million to $297 million meaning that for the fourth quarter we are expected revenue in the range of $71 million to $77 million. The second setback we’ve experienced is in our memory business with our Server DIMM Chipset. As you know when new businesses are launched issues can arise and unfortunately we are working through a few technical issues that we’ve recently discovered with one of the chips which will cause us to miss a customer qualification window. We’re in the process of…

Thanks Ron. I’d like to remind everyone that for this call and for internal assessment, we use non-GAAP or pro forma numbers to discuss our operating results, as well as forward-looking projections, which we believe are indicative of complete performance as they include certain cash events and exclude certain non-cash and discrete events, such as stock based comp, amortization, impairment and restructuring charges, as we believe these are not indicative of long-term performance. As noted, we will provide reconciliations of the most comparable GAAP measures on our website. In the case of any forward-looking projections or estimates containing non-GAAP information discussed on this call a reconciliation may not be available due to the unreasonable effort to make such a determination, or provide such information as more fully described on our website. Let me first review some of the financial highlights for the third quarter. As Ron mentioned, revenue for the third quarter was $73.8 million within our guidance of $73 million to $78 million, a 1% increase over the second quarter and an increase of 6% year-over-year. Operating income was $27.5 million, an increase of 5% quarter-over-quarter and an increase of 11% from a year ago. Cash and cash equivalents were $363 million as compared to $348 million last quarter and $271 million a year ago. Going into some more detail for the current quarter. Our memory and interface division revenue was $55.4 million, cryptography research division was $12.2 million, and our lighting and display technology revenue was $6.2 million. Quarter-over-quarter, these numbers represent an increase of $0.8 million and $0.4 million, for mid and CRD respectively, and a decrease of $0.2 million for lighting and display technology. Year-over-year, revenue increased by $2.9 million, $1 million and $0.2 million for mid, CRD and LTD respectively. The increases were nearly due…

Thank you. [Operator Instructions] Our first question comes from Sujit de Silva with Topeka, your line is open.

Hi Ron, hi Satish. Couple of questions here. First of all on the memory chip product, how fundamental is the issue there, is there a priop respin and does it affect all the product classes you have or is it isolated to --

Sujit, thanks it's Ron, so it’s still preliminary, at this point we just found out about it, we're going through it in some detail. Typically these are fixed with respins, the issue as we discussed before at the Analyst Day in the previous earnings calls is we really need to hit the customer windows and when we look at this we just are concerned that we’re not going to hit that window. So as a result, we just can't project the revenue that we bought last year.

Okay, great thanks Ron. And then you've talked about some of the deals that you required it for the fourth quarter, can you talk about what areas those deals are in to get a sense of what you're looking for to meet the guidance?

Sure, they were really across the Board, there were a couple of very large deals on the security side, but one of them that we were close to moving in and it stalled. But they were really across the business. What we're seeing, we tried to reflect in the prepared remarks is, it's just slower than it was before. I know there's a lot of change in the semiconductor industry, there is lots of consolidations. People are all pulling on those orders to get deals done and we are just not seeing the cycles to be able to see them, get closed, which is why we wanted to communicate as soon as it was clear that this was indeed the case.

Okay and then lastly about the restructuring program you announced here, how much additional room is there in the OpEx or headcount from this point? And are there any particular programs that some of the newer opportunities that are not been going to be funded as much with this or those still all play? Thanks.

So let me answer that try to be rather precise as we go through it. So in the emerging solutions division, the more incubated size of that we had completed and launched the smart data acceleration platform. We did this a couple of weeks ago at the Analyst Day and we used it as a development platform. That was completed, that phase of it was completed when we launched it and that was one of the affected programs that we concluded that we really should hold at this point, that quite candidly was independent of the restructuring that was the decision we took previously to say that, let's hold it at where it’s at and see especially as people start to think about FPGA acceleration more. We are very pleased with the program. We are excited by it. We think it's a way cool thought leadership product. But it's not clear where we need to take that into the future. We have pared back somewhat on the binary pixel program as well where we are still excited about it. But it doesn't have a lot of customer traction, so that was a very modest investment candidly though. The rest of the reductions were across the business, it wasn't program specific, it was more where we had duplication of resource over the last year in anticipating us more significant growth. We just didn't think it was prudent in the best interest of shareholders to continue that investment waiting knowing that next year is likely to be more challenging or the growth is going to come in a manner that’s different than we had thought. So there is nothing of the strategic programs that have been terminated as we said we still believe in them, it's just very unfortunate where we ended up with the slower deals and this bug.

Thank you. Our next question comes from Gary Mobley of Benchmark. Your line is open.

This issue that you discovered for the memory chipset business where the emergence of that business, has it caused you to reconsider whether or not makes sense to be a chip company and are we now looking for a window for that business to eventually ramp in the 2017 timeframe?

So, Gary. It's Ron. No, we haven't changed our opinion about it, we're more optimistic than ever that there is a lot of opportunity…

Ron, I think we've lost you.

So that means by definition that would be more into 2017. The roadmap we've been sharing with selected customers and they're very attracted by it and I think it's fantastic. So it's reassuring that we have something, it's just not in the timeframe that we had wanted.

Okay, you talk about a delay in the signing of significant deal on the security side of the business and assuming perhaps it might have to do with an traditional customer for CryptoManager, correct me if I am wrong there and did you say that the deal that was in the Q is no longer likely to close?

Yes that was precisely the word, we didn't describe where it was, it was a broader deal partnership certainly involved a lot of the security technology that it was confidential what we were negotiating. And it may comeback, but at this point we just don't see the likelihood that it will comeback. So and setting expectations for this quarter and for the fourth quarter and for next year, we just wanted to be more prudent.

What was the hesitation for that particular product with the customer?

I am not sure, I understand the question. What was their particular concern?

That's right.

I am not sure I can answer that precisely, it’s one answer that you should probably go on their side. They just preferred to wait and reconsider later on.

Okay.

So it's very hard and we're still in contact with all of these customers, it's not like it completely goes away. But if you don't see that it's within the reasonable forecast period and there is no driving force for them, again just to be prudent we have to assume that that's not going to be the case.

Yes, Gary we don’t disclose the customers we’re negotiating with, I think it won’t be prudent to talk about them.

I understand that -- the root of my questions just trying to understand whether or not CryptoManager has legs beyond QUALCOMM.

We still have a lot of interest that we believe it and those are the deals.

The delay or the deferred closure of some licensing deals outside of the security side of the business. I wondering if any of those were patent licenses and if there is some delay in closing some of those patent licenses, might we see another round of litigation as a result.

So there were some patent licenses, clearly we’ve said in the past that our preference is not to litigate, although that could always be a potential outcome. What we’ve tried to do is establish market rate, communicate very fairly and openly with all of the customers and a variety of these quite candidly it was much more of an internal focus where they just can't get things done quickly enough because they have their own problems and challenges on restructurings and M&A, so it's just more of cycles. But you know if somebody is recalcitrant we will obviously consider that.

Okay last question maybe just a housekeeping question, Satish what was your fourth quarter non-GAAP OpEx guidance?

Fourth quarter non-GAAP OpEx and COGS guidance was between 42 million and 45 million down from the previous quarter, down from Q3.

Thank you. Our next question comes from Mark Lipacis of Jeffries. Your line is open.

Thanks for taking my questions. In the press release you mentioned ST and Nvidia being lower, are those permanently lower or is there a chance for those guys to come back up to previous levels?

Hi Mark, in the near-term they will be lower, I think that’s how the deal was structured where the payments were not linear.

Okay fair enough. And how should we think about the cryptography revenues looking past to next quarter into 2016, is it -- should we think about that as being a growth business in 2016 or should we think about that being flattish to 2015?

Mark, we don’t disclose revenue by the different initiatives within CRD. So within CRD we have CryptoFirewall and we have DPA, patent licensing and we have CryptoManager, so we don’t break it down. But we believe overall the security business is something that we believe has growth potential and CryptoManager is something that we’re quite excited about and expect to see future signings from CryptoManager.

Fair enough and last question from me Satish is how should we think about the cash flow implications and restructuring going forward. I understand there is just $3 million to $4 million charge this quarter and then I think I heard you to say about $2 million lower of positive impact on OpEx from that in the December quarter and then you said, I think you said $10 million of savings next year. Does that just imply A: an additional $500,000 savings in the March quarter and then kind of were straight line from there and are there any other restructuring charges that you would expect to hit past the December quarter and that’s it from me? Thank you.

Mark, we expect all of the charges will be taken this quarter I think the cash charges will be between three and four and that sort of modelled us would be to model flat expenses to 2015. So the $10 million savings for 2016 is based on the current run rate we had in Q3 and the $2 million savings for Q4 is also based on the run rate that we had in Q3. Hence the reduction and the guidance on the OpEx, but for next quarter I think the best way to look at it would be to quarterizethe flat expenses 2015 to 2016.

Fair enough and then is there -- do you expect any more restructuring charges at just $3 million to $4 million in December quarter and that’s it?

That’s it.

Thank you. Our next question comes from Atif Malik with Citigroup. Your line is open.

Hi guys thanks for taking my question. Ron, when you say security deals are stalled I just want to understand is that because your customer itself is going through restructuring or there is no interest in your product?

So there is still be interest but again it's hard to tell from the customers on what their exact decision making processes, they certainly have their own actions and things that they're dealing with. So I can't really say. We see a tremendous interest across the board for the product, it's just we were hoping that this deal was going to close and be more significant and timely, to contribute to this quarter and more substantially next year, but it’s not.

And then a question on Cross Point technology, Micron-Intel has launched their product and you guys have tremendous IT on that side with Unity Semiconductors. So my question is, are the existing memory deals with Micron already factoring in the use of Cross Point IP from Rambus?

Yes, all of the deals that we have with the existing memory providers is a broad license to our patents. So that would include them. For non-DRAM, or new licensees, that would not be included.

Okay, and then one last one on restructuring. Are you guys considering getting out of the lighting business or anything like that? Or is it just kind of trends across the board?

No, the lighting business is not affected by this at all. They’ve made tremendous progress over the last couple of years growing rather significantly. We don't expect to have significant growth about it. But we’ve been rather transparent on these calls and also with the team. They know that this is not a core to the rest of it or synergistic, it's an adjacent business. And they know what that means at the right time it would be an excellent candidate for divestiture.

Thank you. Our next question comes from Paul Coster of JPMorgan. Your line is open.

Yes, I am sorry to beat a dead horse there, but just on the, first of all on the contract side, on the security side of the problem. It doesn’t sound like this has been a competitive loss, can you confirm that nor a price based loss?

It was not.

And then on the memory chip side, I mean how far had you got to commercial volumes on this? And I guess it still feels like it’s been pretty late in the day to discover the problem. What in retrospect do you think you might have done wrong at Rambus?

We’re in the middle of the analysis on lessons learned right now. But when you have these type of problems, there is obviously something in our verification process or modelling early on. So that’s where we’re looking and we’re going to dig deeply. It’s really unfortunate but these happens, as I said I am after being in the semiconductor industry for 20 years, this is just what happens. We had a press schedule, the team executed really well, it booted Windows right away, everything was looking very good and we got caught on something very recently where it wasn't operating correctly. So we just have to go back and fix it.

And then to what extent did you invest in volume capacity already?

We really, we have a foundry of course that’s running it, but there is no prepaid money associated with this, so there is really no capacity commitments on at any point.

Thank you. I am showing no further questions. I would like to turn the call back to Ron Black, Chief Executive Officer for closing remarks.

Thank you all for your continued interest and support. We look forward to sharing more details on our business at the next update. Thank you.