For Don, Why RMBS is QCOM and not IOM:
1. RMBS is a pure IPR which will licenses its technology to each of the key RAM manufacturers.
2. INTC is committed to RMBS, as evidenced by its financial stake in the company, its roadmap going forward, and the need to drive consumers towards faster CPUs.
3. DELL, the only really important PC company, has indicated that it intends to be 50% RDRAM by mid-2000. The other top boxmakers are also all producing RDRAM-based computers.
4. RDRAM scales to much faster speeds than DDR, and although RDRAM may initially be more expensive than conventional RAM, the price differential will dissipate as the product ramps up. Additionally, RDRAM should be heavily entrenched by the time DDR is even fully available for PCs.
5. RMBS has yet to even try to market its product through any form of advertising. Just wait and see once the product is available in quantities and they do so.
6. Streaming media and broadband will drive the need for faster RAM, just as RDRAM is reaching critical price points.
7. The stock is fundamentally undervalued, when measured against any reasonable metric of expected sales. For example, Dataquest estimates the DRAM market alone at $65 billion in 2002, with RDRAM at 50% share. At a 1.5% royalty, this means $65 billion * 50% * 1.5% = approx $500 million in royalties. Take away 30% in tax = $350 million in royalties. With 24 million shares, we have $15 in earnings. With a modest 20 p/e, that's a $300 stock. None of these projections include non DRAM products, nor do they factor in the possibility that the entire DRAM market goes RMBS, as it very well might.
Enjoy the ride.
Prophet |
