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Technology Stocks : Rambus (RMBS) - Eagle or Penguin
RMBS 101.61+2.8%Dec 5 9:30 AM EST
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To: FLSTF97 who wrote (28616)9/3/1999 10:22:00 AM
From: grok   of 93625
 
Glad to see you working with these numbers. One thing to realize is that the revenue steam from royalties on their Direct Rdram IP (that's the one that matters) has not even begun yet but still they have been profitable for the last 11 quarters. Their costs are well contained since the engineering work is finished. So the royalty ram should be pure gravy.

But what PE multiple will the market give it? Or price to revenue? It is currently around 300 PE. If earning increase by 10x will PE come down to 30? Or will PE remain high because it has great profit margin and great Return on Invested Capital? How about this one: assume that someday it captures 100% of the dram market but then assume it just tracks up and down as the dram market goes through its legendary girations. Should it have the multiple of a dram company?

Many questions, few answers.
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