John, first it is only twice not four times. Second, even if you assume it is the whole DRAM, this is expected to peak under $60 B in 2003 and go down thereafter (and that is the most optimistic view, I do not see a peak much above $45 for the memory sector, and that includes $15 B of flash by 2003/2004 or so, SNDK get some of these royalties, not RMBS). On that peak, RMBS would make, lets be generous, 1.5% or $.9 B, or after taxes and other expenses about $.5 B, or $5/share sometime in the time frame of 2003 or so. I think that 15 times three years out earnings is a fair price. I think RMBS will get much higher than that fair price, but lets keep the numbers in perspective.
There is also the note from Tate that DRAM will eventually be only 35% of total revenues, and if that is the case, then that number should be increased, but until we get some better visibility of these other sectors, conservatism should reign, and furthermore, some time in the not too distant future (like next year) we may start and see the semi peak, and that will hit RMBS like a ton of horse manure, but until then, lets enjoy the party.
Zeev |
