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Technology Stocks : Rambus (RMBS) - Eagle or Penguin
RMBS 92.35-0.4%Nov 25 3:59 PM EST
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To: Dan3 who wrote (46952)7/11/2000 5:44:42 AM
From: Steve Lee  Read Replies (2) of 93625
 
"Re: he probably collects now between $.5 to $1 per pair of wipers.

A far cry from the 20% of the profits made on each vehicle that Rambus's current valuation is based on.

What's 2% of the selling price of the average car? That's what Rambus is demanding"

If RMBS were looking for 2% of the selling price of a whole computer system with software then your analogy is accurate. As they are only asking for a royalty on the DRAM, the analogy is more like the windshield wiper guy asking for 2% off each set of wipers. With Zeev's estimates of his wiper royalties at $.5 to $1 a set, that would put the cost of a set of wipers at about $37.50 to complete the comparison. Probably about right.

So your analogy has confirmed the validity, based on a similar historical example chosen by you, of Rambus's level of royalty.

If the DRAM makers cannot choose a profitable line of business and run that business efficiently, thus making small profits, that is their problem. In fact, Rambus is a blessing to them right now. The cost of manufacturing is greater for RDRAM than SDRAM by a lesser margin than the selling price difference. So the advent of RDRAM actually allows them to make MORE profits. Hence the eagerness of manufacturers such as NEC to ramp.
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