RMBS: Rambus, Inc. Message Board

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Technology Stocks : RMBS: Rambus, Inc.

RMBS 100.33

-5.1%

3:59 PM EST

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To: Didi who wrote (58)	1/11/2001 10:49:45 PM
From: Jack Hartmann	Read Replies (1) of 79

Litigation Still the Key Issue for Rambus by Jeremy Lopez \| 05:58 PM \| 01-11-01 \| E-mail Article to a Friend What Happened? Rambus RMBS reported fiscal first-quarter results Thursday evening. The designer of semiconductor intellectual property announced earnings of $13 million on sales of $35 million. On a per-share basis, earnings of $0.12 fell a penny short of the First Call consensus; a higher-than-expected tax rate was the culprit. What It Means for Investors The beauty of Rambus' business model is evident in these quarterly results. On just $35 million in sales, the firm generated roughly $20 million in operating income--an operating margin of almost 60%. Had it not been for a higher-than-expected tax rate (which is not a concern to us), Rambus' earnings would have met Wall Street estimates. Although results were solid, we continue to believe that looming litigation makes Rambus' future highly uncertain. The issue is the validity of Rambus' patents--whether the firm is entitled to receive royalties for the production of nonproprietary forms of memory chips. We believe the outcome of these legal disputes could decide whether investors make or lose money in Rambus. In the quarter just ended, a few more memory chip manufacturers, such as Samsung and Mitsubishi, willingly agreed to pay Rambus royalties. This is good progress, but if existing litigants like Micron MU and Hyundai win in court, all bets are off: Rambus will lose a material stream of revenue. Rambus could also get help from Intel's INTC release of the Pentium 4 and from generating sales in industries outside the PC sector. But in our opinion, neither of these possibilities overcomes the inherent uncertainty of investing in Rambus in light of its ongoing legal battles. news.morningstar.com Di, didn't know you followed RMBS. Jack

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