Okay, some "How much RDRAM?" analysis:
Concentrating on 2001 or 2002, a little sensitivity:
1. Size of DRAM market $25BN $40BN $60BN
2. Royalty Rate 1.5% 1.5% 1.5%
3. Market Penetration 20% 35% 50%
4. Net Margin 75% 75% 75%
5. Shares Outstanding 24.4MM 24.4MM 24.4MM
6. Forward P/E 12x 25x 50x
7. Implied Price $27.66 $161.37 $691.60
1. Dan3 proposed something like this as a reasonable range for 2001.
2. Do we have general agreement that this is the appropriate rate?
3. This is the big point of contention, of course. How low can it go?
If it's a niche market, what's the possible downside?
(Note: I choose to ignore Carl's contention that RDRAM is "dead dead dead").
4. Again, Dan3 proposed this as a reasonable number.
Obviously, not all money received will fall to the bottom line.
What's the correct number? It's a guess.
5. Shares o/s reported in 10K. Note "Profile" is wrong.
6. As we move through the next decade, will an end-game for Rambus emerge, or
will some other tech come to the fore? This same question overhung the disk
drive makers a couple of years ago, and they traded at 10X,
which of course was too high!
7. So, at this point, we have some downside, and lots of upside.
Comments?
Best,
JS
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