Hi all; Morningstar.com says bad news for RMBS shareholders:
Choppy Waters Ahead For Rambus Shareholders
Recent lawsuits slapped on Rambus (Nasdaq: RMBS - news) are not a shock to the world, but they confirm the magnitude of
uncertainty regarding the firm's future and bring into question its ability to profit from its memory-chip patents. With Rambus' future now largely in the hands of the courts, the stock is as speculative as it gets, and investors should probably continue to avoid the stock.
The mainstream viability of Rambus' bread-and-butter product--a proprietary design for memory chips called RDRAM (Rambus Dynamic Random Access Memory)--has been in question for a long time. Not only has RDRAM proved hideously expensive relative to competing memory standards, but the memory chips are also about as scarce as Goodyear tires on a Ford Explorer.
The long-term outlook of RDRAM suffered yet another blow when Intel (Nasdaq: INTC - news), historically an invaluable ally to Rambus, recently confirmed its own jitters about RDRAM by altering its plans to exclusively use the memory chips for its upcoming Pentium 4 processor. Clearly Intel has a huge influence on which computer standards are adopted, and it did not want to jeopardize the success or launch of its own products. More importantly, Intel's inclusion of other non-Rambus DRAM in its Pentium 4 roadmap adds more coals to an already hot fire: The percent of the memory market share RDRAM will capture might not be nearly as high as many pundits originally anticipated.
...
From an investment standpoint, however, the point is not so much to try and determine to what degree Rambus' patents are valid, but more to recognize the complexity and uncertainty of the disputes in relation to the viability of Rambus' future revenue streams. Rambus' patents could very well hold up in court, and the firm could secure the right to collect royalties 100% of all DRAM sales. But with all the available information, the risks of investors losing money seem to far outweigh the potential benefits of rolling the dice on the stock. Without a margin of safety necessary to secure a favorable long-term outcome on a stock that is already very expensive, investors should pass on Rambus.
biz.yahoo.com
-- Carl |
