Gene:
Good comments.
Here are some assumptions and thoughts on the topic from this end.
(A) When this crazy mania ends, someone will write a book about the quickest, largest theft of market share in history,..... AMD's destruction of Intel's monopoly in micros. Intel was slow to recognize that it was taking place, even slower to react, and reacted both poorly and in a panic once the stupor ended (why the market hasn't punished the stock for this is beyond my ability to understand). Never having had to react to competition, Intel thrashed around for far too long, first imperiously ignoring, then denigrating, then fighting on price ("we have deeper pockets"), finally searching for an alternative means to re-establish its monopoly position. IMHO, Intel's involvement with RMBs was perhaps initially based on a belief that RMBS' memory technology was superior but more probably was based on using RMBS as a vehicle to re-establish its former monopoly status.
(B) Intel has picked up some very nasty black eyes as a result of its RMBS involvement, as is well known. As well, Intel now knows that Rdram is NOT superior to DDR and is barely superior to current Sdram. Worse, Intel knows that it is more expensive to build and in the memory game, cost is everything. The evidence emanating from Intel (road maps, memos to clients, etc.), hints at a slowly diminishing enthusiasm. The relationship has not been profitable to this point in time, it has cost some of Intel's big clients (like Dell) plenty, the memory producers dislike it, it isn't selling very well (again, Dell) and the company actually had to restate results as an indirect result of the relationship, which is a massive embarrassment. Internally, Intel has got to be re-examining the relationship and asking,.. "When do we see some kind of a pay back on this thing?" Intel already knows that it isn't going to be able to jam this one down the industry's throat and that further efforts to this end will just further provoke folks who make better allies than enemies.
(C) Without Intel's backing, RMBS is a non-entity.
(D) RMBS applied for the patents almost a decade ago, yet were granted the patents only a year ago. In the interim, everybody and his dog has used and developed the technology , believing that it was essentially, "general knowledge". Did RMBS really invent this stuff (or even a part of it) or were they just clever enough to have recognized that nobody else had done so? I don"t know, but I suspect that it will not easy to win this in court, given the time-frames involved. More importantly, this is NOT the kind of situation where even a weak player would cave.
(E) Toshiba's cave-in makes little sense unless there is something BIG in it for Toshiba. We will spend a bit of time examining that for sure. Japanese corporations have a lengthy history of having ignored patents (much to their advantage) and I would bet my house against a dozen donuts that it isn't their concern about the patents that provides the motivation. Of course I might be wrong on this (heh, heh, heh) .
(F) The timing was exquisite. Zillions of calls were sold by "investors" who had it pointed out to them that the prems were big and that only a day or two remained until expiration. Pity those innocents, as they were carried from the field on their bloody shields on Friday. And then of course we had the split and even a "big announcement" about an advance in their technology. A marvellous coincidence no doubt, but I smell the body odors of some big financial players (funds) in this one. Warrants or options for Toshiba? Who knows, but there was a pile of money made by at least a few folks in a short period of time (reminds me of the day Rubin resigned).
(G) Time flies. The "RMBS-wins-the-memory-wars-courtesy-of-Intel" story has been flattened by recent events and beaucoup independent tests. A new story was needed. This new story is a good one, at least for the time being.
(H) Above all else, this is a stock where an awful lot of the float is in friendly hands and it is on every short"s "hit list". In this market, a large short position is often a target for a squeeze.
Personally, and perhaps surprisingly, I see the weak link as Intel. That company has a bag full of diverse difficulties and can ill afford to get into a back ally brawl with suppliers or further hurt already wounded clients. I think Intel is already quietly examining how it can divorce this rowdy broad with a minimum of public tittering. We'll be doing a bit more than normal digging in this territory.
Best, Earlie |
