Orion:
Thank you for your generous acknowledgement.
I have spoken with RMBS IR, and they presently intend to post the papers on their website. Once I review the papers, I think it will be a little easier to evaluate their claims. I only wish we still had Gregg Powers on SI, since it was his company's CDMA patent analysis that allowed us the confidence to stick with QCOM during its battle with ERICY. As you recall, at the time, ERICY was 10 times the size of the Q; they are now peers.
Overall, I believe the litigation is positive for RMBS in the long run for a number of reasons. First, there is the possibility of an adjudication or settlement under which RMBS would earn royalties for SDRAM. This would be an unexpected windfall, or at least one that I had not expected. Second, it sends a clear signal that RMBS is not some kind of Neville Chamberlain-type diplomat, which will sit back and grovel to the powers that be to be nice to it. Instead, RMBS will vigorously defend its IP, even if it means going to war with its partners. Third, while the litigation per se creates some uncertainty, thus far it does not appear to have had any impact on the rampup of RDRAM. So, even while the litigation is progressing, RMBS should be growing into and past its valuation through RDRAM alone. Finally, there is considerably greater risk to Hitachi than to RMBS in the litigation. If RMBS loses, it really is just out its litigation costs. If Hitachi loses, however, it could be destroyed competitively. This risk favors a settlement in the long run, though you should anticipate an anti-RMBS propaganda effort by them (and the anti-RMBS chorus) in the short run. Those who were around for the QCOM/ERICY battle will recall exactly what I'm talking about.
There is a risk that the DRAM giants will feel the need to ally with Hitachi in the litigation, since they share a common concern over the enlargement of RMBS' reach. This may happen, but I'd be surprised if the DRAM guys would shoot themselves in the foot by slowing the RDRAM ramp up.
Though I am not an electrical engineer, I believe RMBS is on solid footing in the long run for two reasons. First, by all accounts, there is no real alternative to RDRAM right now once the need for the bandwidth grows. Second, in my experience, those tech companies which are highly focused on one particular area of technology where few others are focused, invariably know a lot more about the subject than any "expert" relied upon in the media. Farmwald and Horowitz are preeminent experts in their field; RMBS has over 100 engineers focused on the chip-to-chip interface issue, and they've been at it for 10 years and 100 patents.
I would not bet against them.
Prophet |
