<font color=red>NEWS!! MSDW (Edelstone) The Game Is Almost Over.
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PART 1
MS: RAMBUS: The Game Is Almost Over pt1
by: bettyking2000
9/13/00 8:48 am
Msg: 159440 of 159507
RAMBUS: The Game Is Almost Over
by Edelstone, Mark; Cross, John; Gerhardy, Louis; Kimotsuki, Sonia
Industry(s): Electronics (Semiconductors);
Published: Sep 13 2000 7:56AM
Company(s) mentioned in this report: RMBS
Research Abstract:
* NEC Signs License Agreement
NEC is the second largest semiconductor company in the world and it has
approximately 8% DRAM market share.
* Pressure Should Mount For Other DRAM Makers
NEC's licensee agreement significantly heightens pressure on other DRAM
manufacturers to settle with Rambus.
* Raising Earnings Estimates
We are raising our estimates for fiscal 2000 and 2001 and expect more license
agreements to drive further upward revisions.
* 2003 Earning Power of $3-5 Per Share Looks More Credible
We continue to believe that Rambus will capture royalties on the bulk of the
industry's DRAM and logic interface revenues.
North America: United States of America
Technology: Semiconductors
September 13, 2000
Change in Earnings Forecast
Rambus
(NASDAQ: RMBS, Bloomberg: RMBS US)
The Game Is Almost Over
__________________________________
Mark L. Edelstone
+1 (1)415 576 2381
Mark.Edelstone@msdw.com
John Cross
Louis P. Gerhardy
Sonia Kimotsuki
__________________________________
-NEC SIGNS LICENSE AGREEMENT
NEC is the second largest semiconductor company in the world and it has
approximately 8% DRAM market share.
-PRESSURE SHOULD MOUNT FOR OTHER DRAM MAKERS
NEC's licensee agreement significantly heightens pressure on other DRAM
manufacturers to settle with Rambus.
-RAISING EARNINGS ESTIMATES
We are raising our estimates for fiscal 2000 and 2001 and expect more
license agreements to drive further upward revisions.
-2003 EARNING POWER OF $3-5 PER SHARE LOOKS MORE CREDIBLE
We continue to believe that Rambus will capture royalties on the bulk of the
industry's DRAM and logic interface revenues.
__________________________________
STRONG BUY
Price (September 12, 2000): $76.81
Price Target: $200
52-Week Range: $127 - 14.63
WHAT'S CHANGED
Earnings (2000): $0.16 to $0.18
Earnings (2001): $0.40 to $0.45
__________________________________
Price: Abs. and Rel. To Market & Industry
FY ending Sep 30: 1999A 2000E 2001E 2002E
EPS ($) 0.09 0.18 0.45 --
Prior EPS Ests. ($) -- 0.16 0.40 --
P/E 882.8 438.3 170.7 --
Price/Book 125.9 97.8 62.5 --
Market Cap ($ m) 8,365
Return on Equity (06/00) (%) 13.3
L-T EPS Grth ('00 - '03) (%)130.0
P/E to Growth 1.31
Shares Outstanding (m) 108.9
Q'trly 1999A 2000E 2001E
EPS actual curr prior curr prior
Q1 0.02 0.02A -- 0.10 0.08
Q2 0.02 0.04A -- 0.11 0.09
Q3 0.02 0.04A -- 0.12 0.10
Q4 0.03 0.08E 0.06E 0.12 0.13
E = Morgan Stanley Dean Witter Research Estimate
PART 2
messages.yahoo.com
MS: RAMBUS: The Game Is Almost Over pt2
by: bettyking2000
9/13/00 8:49 am
Msg: 159444 of 159507
part 2 of 3
The Game Is Almost Over
Summary and Investment Conclusion
After the market closed yesterday, Rambus announced that NEC has agreed to
license its DRAM intellectual property (IP). The agreement covers SDRAM, DDR
DRAM, 1066 MHz Direct RDRAM, and the logic controllers used to interface with
these memories. Following earlier announcements from Toshiba, Hitachi, and
Oki, NEC became the fourth company to broadly license Rambus's SDRAM and DDR
DRAM patents. Given NEC's leadership position in the semiconductor industry,
we consider this latest development to be very significant and the agreement
further validates the strength of Rambus's IP business model. As a result,
we expect RMBS to advance sharply on the news.
Based on the expectation of higher royalty income derived from the NEC
agreement, we are raising our fiscal 2000 (ends in September) earnings
estimate for Rambus from $0.16 to $0.18, and our fiscal 2001 earnings
estimate has been increased from $0.40 to $0.45. In addition, we believe
that additional license agreements are likely, and they should lead to higher
earning power in the future. Consequently, we reiterate our Strong Buy
rating and $200 stock-price price target on RMBS. Once Rambus signs its
first logic interface license with a leading semiconductor company outside of
the DRAM market, we believe that it will be "game over" for the rest of the
DRAM and logic interface suppliers, and investors should quickly adopt our
long-term earning power view for the company.
NEC is a Leader in the DRAM Industry
NEC is the second largest semiconductor company and the fourth largest DRAM
manufacturer in the world. We estimate that NEC's current market share in
the DRAM industry is approximately 8%. In addition, we believe NEC shipped
about $2 billion of DRAM in 1999, and we expect the overall DRAM market to
grow around 60% this year. Based on NEC's strong position in the DRAM,
logic, and overall semiconductor market, we believe that the company's
license agreement with exert significant pressure on other DRAM and logic
manufacturers to come to terms with Rambus in order to secure favorable
royalty terms. On September 11, Rambus filed patent infringement lawsuits
against Micron and Hyundai in Germany and France, and the trial in Germany is
expected to commence in February 2001. Prior to that date, we expect the
trial for Rambus's claims against Infineon to begin.
Multi-year agreement similar to that of Toshiba's
We believe NEC signed a multi-year agreement, and the company will pay an up-
front fee and ongoing royalties on shipments of any SDRAM, DDR DRAM, and
logic-interface devices communicating with these memories from April 1, 2000,
and beyond. Due to the relatively smooth licensing discussion, we believe
that NEC's up-front payment and ongoing royalty rates are similar to the
terms established with Toshiba. In comparison, we believe that Hitachi's
royalty rates are higher, and we expect the eventual rates paid by Hyundai,
Infineon, and Micron, as well as any other company that provides a more
difficult negotiating framework to be higher than the levels agreed to by NEC
and Toshiba.
PART 3
messages.yahoo.com
MS: RAMBUS: The Game Is Almost Over pt3
by: bettyking2000
9/13/00 8:50 am
Msg: 159445 of 159509
part 3 of 3
Although neither company has disclosed details, we believe that NEC's SDRAM
royalty rate is slightly less than 1.0%, while DDR rates are likely 2.0%-
3.0%. We believe the SDRAM and DDR SDRAM controller IC royalty rates for NEC
are around 2%-3% and 4%-5%, respectively. While we believe that the license
agreements with Rambus's existing licensees differ from one another, we
estimate that Rambus DRAM royalties are in a 1%-2% range, while the Rambus
DRAM-based logic interface royalties are 3%-5%.
Reiterate Strong Buy
As a result of this latest licensing agreement that covers all SDRAM, DDR
DRAM, RDRAM, and their controller interfaces, we continue to believe that the
RDRAM transition issue is no longer the key issue facing RMBS. Based on the
scope of its patents, we believe that every DRAM supplier and the concomitant
logic interface suppliers will need to license Rambus's patents, including
Acer Laboratories, ATI Technologies, Fujitsu, Hyundai, IBM, Infineon, Intel,
LSI Logic, Micron, Motorola, National Semiconductor, NVIDIA, Samsung, Silicon
Integrated Systems, Transmeta, Via Technologies, and many others.
We believe it is likely that more companies will complete license agreements
before the end of the year, and RMBS should continue to advance as more
companies license its patents. We believe it is also highly likely that one
or more of the current lawsuits with Hyundai, Infineon, or Micron will be
settled before the end of the year. As more agreements are signed, we expect
to continue to increase our earnings estimates, and since the September
quarter will include SDRAM based royalties for the first time, it should
provide the first glimpse of the potential earning power and the strength of
Rambus's business model. We continue to believe that Rambus will enjoy
earning power of $3-$5 per share by 2003.
Followup statement by Bettyking2000
messages.yahoo.com
Re: bettyking2000: good link
by: bettyking2000
9/13/00 9:06 am
Msg: 159471 of 159511
>I was curious how you get that from MSDW?
We have our brokerage account at MS and they send email alerts to us. This was in my morning email.
bk2k |
