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Rambus Inc. (RMBS - Snapshot Report) is set to report first quarter 2013 results on Apr 18. Last quarter it posted a 125.0% positive surprise. Let’s see how things are shaping up for this quarter.

Growth Factors this Past Quarter

Rambus’ innovative patented technologies are of great importance to chipmakers for making advanced chips to be used in computer or electronic goods. Though Rambus beat the earnings estimate in the fourth quarter, revenues dropped 31.1% year over year due to a decrease in contract renewals, coupled with lower royalty revenues and less number of license agreements.

However, operating costs declined due to higher cost rationalization with a major cut in marketing, general & administrative expenses.

Rambus expects first quarter revenues between $58.0 million and $63.0 million, which indicate decent sequential growth.

Earnings Whispers?

There are some factors that could have a positive impact on Rambus’ first-quarter result. In February, Rambus signed a patent licensing agreement with chip-making company LSI Corp. (LSI) and settled all previous conflicts regarding patent infringements. In March, the company shifted all its Display patent assets to a subsidiary of Acacia Research Corporation (ACTG). Display patents were offered under the Lighting and Display Technologies segment. Instead, Rambus opted to focus more on general lighting to capitalize on the imminent opportunity in LED (light emitting diode).

The Zacks Consensus Estimate for the first quarter stands at a loss of 3 cents while that for fiscal 2013 stands at 14 cents loss per share.

Rambus has surpassed estimates in the first three quarters of 2012 but missed significantly in the fourth quarter, which resulted in a trailing four-quarter average negative surprise of 98.2%. It recorded a positive surprise of 125.0% in the fourth quarter of 2012 whereas it had earlier posted a negative surprise of 700.0% in the first quarter of 2012.

Estimate revisions have been minimal in the last 30 days, with one upward estimate revision in the past 60 days. As a result, the Zacks Consensus Estimate has remained unchanged for the first quarter as well as for 2013 over the past 30 days. Over the last 60 days, the Zacks Consensus for the first quarter improved to 3 cents loss per share from 8 cents loss per share. The Zacks Consensus Estimate for fiscal 2013 moved to 14 cents loss per share from 18 cents loss per share.

The lack of downward movement in estimates signals that the first quarter might be a good one. Moreover, the stock carries a Zacks Rank #1 (Strong Buy), which indicates upward movement of the Zacks Consensus Estimate over the past 60 days.

We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

We expect the following stocks to beat earnings estimates in the upcoming quarters given Positive Zacks Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method) and a favorable Zacks Rank.

Lattice Semiconductor Corp. (LSCC - Snapshot Report), Earnings ESP of +100.0% and Zacks Rank #1 (Strong Buy).

SanDisk Corp. (SNDK - Analyst Report), Earnings ESP of +9.09% and Zacks Rank #1 (Strong Buy).

LinkedIn Corp. (LNKD - Analyst Report), Earnings ESP of +300.0% and Zacks Rank #3 (Hold).

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