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Technology Stocks : Rambus (RMBS) - Eagle or Penguin
RMBS 87.70-3.8%Nov 18 3:59 PM EST
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To: Zakrosian who wrote (31003)9/28/1999 10:47:00 AM
From: Dave B  Read Replies (1) of 93625
 
Zakrosian,

I don't think this line of thinking is valid. If I recall the lessons from Econ 101 accurately, the money INTC has invested in Rambus so far would be considered sunk costs and irrelevent to whether they should continue with Rambus. The key question is how much more they have to spend in order to get it functional; if they decide it's too much for the benefits, they'll just walk away from it.

Remember, it's not just Intel's money. A number of players have spent considerable sums putting RDRAM infrastructure in place. Intel could either bail on them, which would cause significant ill-will, or they could reimburse the companies involved. Either scenario makes the cost of abandoning RDRAM significantly higher than just "how much money will it cost us directly to finish this up?"

Dave
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