Rambus (RMBS) - Eagle or Penguin Message Board

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Technology Stocks : Rambus (RMBS) - Eagle or Penguin

RMBS 94.22

-1.4%

3:59 PM EST

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To: The Prophet who wrote (47171)	7/13/2000 1:08:01 PM
From: Richard Habib	Read Replies (2) of 93625

My Semico numbers indicate that 1995 was a peak at about $40B for the DRAM market thereafter falling to $13.9B in 1998 at the low. Semico forecast late last year $40.2B in 2002. Adam Schwebel (whoever he is)indicated a figure of $76B. It's reasonable to assume that the peak of this cycle will result in a somewhat larger $ value than the last peak due to the larger number of units shipped. $55B might be a reasonable number to use for 2002. The question is if this will be the peak as this will be about the time new capacity starts coming on line. It seems to me that the critical issue will be how well new supply is correlated to demand. That in turn may be influenced by the technology to better forecast demand/supply issues. 2002 may well represent a peak but one would think the decline will be less than the 65% collapse of the previous cycle that was also influenced by the Asian crisis. The awkward thing for RMBS long term is that it will just be establishing itself as the market leader when the DRAM decline likely sets in. The other issue is, as I've noted before, that the market is discounted much further into the future than previously. If one assumes $55B and RMBS has 75% roy at 1.5% with 97.5% GM and normal tax rate one gets about $4.50 earnings per share. (Includes some chip to chip interface rev that according to Tate will be coming on line at that time.) At share price of 100 that yields a PE of about 22 just as the DRAM cycle contracts. So RMBS may be near fully valued thru the peak of this cycle. Rich

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