Re: Please tell me how wrong I am...
Well, you aren't wrong, we all have to weigh the information we can get, then try to come to the best conclusion we can. Here's how I do it:
Shipments at levels that are more than samples should be in the hands of end users starting some time next month. That beats Q1 of 2000, but just barely. It's been a long 3 years for PC rambus.
VIA is showing pre-production silicon for DDR (which may just be a licensed version of Micron's samurai chipset - so I won't count Micron as another vendor) but AMD is also showing its pre-production DDR silicon.
ebnews.com
So what should the stock be valued at?
Revenues should be about 1.5% of (8.6 then 13.6% of the memory market - Semico Research) or (20% then 50% - Dataquest). For this year, Semico said 1.7% and Dataquest said 5% - both estimates were high, with Dataquest being way off.
Percentage of what is the next question, somewhere between 25 and 60 Billion is the best I can come up with.
Where Rambus will be in 3 years is a pretty open question, but they may be able to stretch the value of their intellectual property past that point - how remains a question, but the same question applies to every other high-tech, so it's not worth belaboring.
The market size numbers are mine for non optimistic and optimistic scenarios - feel free to use your own numbers.
1.5 x 8.6 x 30 = 39 million in 2000
1.5 x 13.6 x 45 = 92 million in 2001
Semico - so far they've been mildly optimistic
1.5 x 20 x 40 = 120 million in 2000
1.5 x 50 x 55 = 413 million in 2001
Dataquest - so far they've been wildly optimistic
Cost of sales for rambus is basically marketing and legal fees, so, for discussion's sake, I'll start with 75% of revenues are gross profits.
30 million 2000
69 million 2001
Semico
90 million 2000
310 million 2001
Dataquest
With 23.55 million shares out, eps would be:
$1.28 2000
$2.94 2001
Semico
$3.83 2000
$13.19 2001
Dataquest
If DDR pushes rambus out of most of the market by the end fo 2001 due to its (claimed) price/performance advantage, that $1.28 + $2.94 = $4.22 per share may be all that each share of Rambus ever sees in earnings from the PC market. The video game, router, etc. markets will contribute a little more, but it's relatively insignificant in comparison.
If rambus becomes a standard and can command the market share that Dataquest forecasts, then the PC market could deliver $15 growing to $25 a share earnings for 2002 and several years beyond with utility company like reliability. But, so far at least, Dataquest has been wildly optimistic about rambus and just as wildly wrong - even semico has erred on the high side in its forecasts of rambus market penetration.
My own forecast is that it's way too late for the optimistic scenario - but I can still see its appeal. Just keep in mind that so far Semico has been right, and Dataquest has been wrong, and if Semico's right, Rambus is worth about $25 a share - but these things change daily, and if Dataquest is right, it's worth several hundred dollars a share.
I think the market is gving about .2 x 330 + .8 x 25 = $86 for an expected value.
My valuation is .1 x 330 + .9 x 25 = $56
Feel free to put in your own numbers,
Dan |
