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Technology Stocks : Rambus (RMBS) - Eagle or Penguin
RMBS 106.06-0.8%Dec 11 3:59 PM EST
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To: Bilow who wrote (72635)5/12/2001 8:59:15 AM
From: SBHX   of 93625
 
Carl,

Here's what I'm guessing will happen. The following is just pure conjecture.

Your assessment of high shorting is probably dead on. If anything will make this pop in the near future, it's shorts covering. Over the longer term, as institutions close out their positions, the movement will probably be predictably lower.

siliconinvestor.irchannel.com

Despite the depth of the financial wealth of rambus converts (from what I can tell here), I see that over 36% (36M shares) of the float is owned by institutions and mutual funds. This makes it hard for them to absorb any big chunk of this 36M shares. This 36M is also much higher than the shorts.

What helps it is that the institutions and mutual funds clearly will not sell into panic, and will wait for a pop in price to slowly divest their positions instead.

Because of this, the upside is likely limited, as large scale selling into strength is the most likely scenario for them.

There is a possible kink in the 'licensees-getting-money-back' scenario. For some of the management in manufacturers that made the arguably questionable call to ramp up drdram production and made significant capital expenditures on that scenario unfolding, they may have a lot to lose from declining drdram sales --- hence that might force them to wait it out on the sidelines.

But as a business scenario for the others, it clearly makes no sense for IFX/MU/Hyundai to be able to sell DDR and SDR 0.5% to 3% less than them, so the payment will likely stop out of necessity.

Of course, I could be wrong.

SbH
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