Rambus (RMBS) - Eagle or Penguin Message Board

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Technology Stocks : Rambus (RMBS) - Eagle or Penguin

RMBS 110.62

+2.7%

Nov 10 3:59 PM EST

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To: DownSouth who wrote (30088)	9/21/1999 12:45:00 PM
From: FLSTF97	Read Replies (3) of 93625

If you have 100% DRAM market share as I assumed, and if you believe that the DRAM market will grow only at 10% and you have 75% profit margins before tax, how can you continue to grow at 50% to justify a PE of 75x. In my assumptions I basically said that their total expenses (essentially being legal, auditing, marketing and R&D) amounted to 25% of revenues. If you can increase the profit margin even more, then earnings will still grow faster than the market. They could stop investing in R&D but that increases the risk that they won't find the next Rambus.If I didn't have any new patents to extend my monopoly towards the end of the patent life I would indeed kill the R&D to maximize value. My proposition is that the rapid growth rate disappears with full market saturation. So I'm really trying to find good ideas that make me believe the total market will accelerate and grow faster than 10%.

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