Warburg Upgrade...
News June 23, 10:08 Eastern Time
RESEARCH ALERT - Rambus target upped
NEW YORK, June 23 (Reuters) - UBS Warburg said on Friday
that it raised its price target on Rambus Inc. , a
maker of chip technology used in electronics and computers, to
$165 a share from $115 and reiterated a strong buy on the
stock.
-- Rambus shares rose 23-7/8 to 121 on more than 8.4
million shares of volume before 1000 EDT (1400 GMT).
-- Rambus settled its patent lawsuits with Japan's Hitachi
Ltd <6501.T>, which will pay Rambus a licensing fee under the
agreement.
-- "We view this event as a significant positive for
Rambus, building on a similar licensing agreement announced
with Toshiba (Corp. <6502.T>) last week. In our opinion, this
validates Rambuss claim that mainstream SDRAM memory implement
fundamental technology covered by the companys patents,"
analyst Seth Dickson said in a research note. "As a result, we
expect other DRAM vendors to sign similar agreements in the
near future - significantly enhancing the companys royalty
stream."
-- Hitachi will have to pay royalties to Rambus on SDRAM
chips used in the Sega Enterprises Ltd. <7964.T> Dreamcast
video game console in addition to royalties on the process
which connects the system memory. Dreamcast alone can
contribute $3 million to $5 million in royalties to Rambus over
the next four to six quarters.
-- If a majority of the DRAM market took a license from
Rambus for SDRAM, "as much as $100 million to $200 million
would be added to the companys net income over the next year
(versus our current estimate of just $30M)," Dickson's research
note said.
((New York newsroom, 212 859-1700, fax 212 859-1717, or
nyc.equities.newsroom@reuters.com))
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