Earlie, the fact that funds managers are not always aware of the intricacies of the businesses they buy in is not new. But the bet on INTC backing the technology is a fair one, particularly in view of the fact that at least right now, DDR is still vaporware and nothing more. I would also limit the weight you put on the fact that currently the bus is mostly a high end PC application, within two years of their launch, high end applications often become "mainstream" or low end applications. I would agree, however, that at $10 Billions plus, the capitalization assumes not only close to 100% penetration of the DRAM business (an event that could happen at best in five years), but a dram market pretty close to $100 billions per year, which I do not think is in the cards for much longer than 5 years. Half of this, however, is quite possible, and with a market discounting the future out to more than five years (at least in some segments), RMBS is just valued according to the market, and IMHO, actually cheaper than companies like AMAT. Unless you discern real signs that RMBS is not going to become the standard in the DRAM business, excessive bearishness is not warranted. Will we see $200/share in the next 18 months? My turnips reading is that yes, we will, but it will be due, IMTO, to a combination of the the normal problems RMBS will see in the implementation of the technology and to a major downsizing of valuations in the market in general.
Zeev |
