cardcounter,
not to mention if you think you could triple my eps numbers which are triple the bullish sellside numbers...
I'm not arguing that at all -- those were your numbers and I was only fixing one problem. Your numbers were very bullish and you can lower them if you'd like.
historically, gross margins are running at to 70% to 80% of revenues
operating margins (ebitda) are running at 30%
net margins (net income) at 20% of revenues
and if your arguing that there are no cost of revenues, r&d, sg&a, engineering, etc...
What you're missing is that the costs do not scale up at all. Whether Samsung is producing 10M RDRAM chips (or SDRAM or DDR DRAM) chips per month or 100M, Rambus's costs of managing the account remain the same, but the royalty now goes up 10X (assuming there's no volume reduction on the royalty). So the historical %'s do not apply once either RDRAM production begins going up (Samsung said the RDRAM market will grow to $38B in 2002 from $3 1/2B this year) and/or royalties from SDRAM and DDR start rolling in.
As for R&D/Engineering, those are exactly the costs that will go up, but since those costs are directly proportional to the number of employees are you trying to claim that Rambus will hire 15X the number of engineers (going from maybe 150 to 2250) as revenues scale from $40M to your estimate of $600M? I don't think so (though I'm sure they'll receive 2,250 applications for every 150 openings <G>).
In summary, again, the costs are not going to scale based on the historical percentages.
Dave |
