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Technology Stocks : Rambus (RMBS) - Eagle or Penguin
RMBS 95.28-1.1%3:59 PM EST
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To: wily who wrote (74983)6/26/2001 11:35:43 PM
From: wily  Read Replies (2) of 93625
 
RMBS price forecast:

Assumptions:

-RDRAM unit share of DRAM market in (per Toshiba's numbers)

2002     2003      2004     2005
18%       25%       26%      27%


-75% net margin

-100MM shares outstanding

-no excessive legal fees (just an assumption)

-PE = 25 (CAGR to go from 18% to 27% in 3 years is 11.4%. Allow DRAM market to grow at 20%, then net RDRAM unit growth would be 23%. But then factor in a declining RDRAM price premium of 6% per year to go from 50% to 25% premium in 3 years, and you end up with 17% CAGR for RDRAM $ sales)

-DRAM market in 2002 will be $20B (WAG)

-2% royalties on RDRAM

-no royalties for SDRAM or DDR

-RDRAM price will be on average 50% higher than SDRAM for 2002

-18% units would would translate to 24.5% by $

Then:

RDRAM sales = .02 * .245 * $20,000MM
RDRAM sales = $98MM

Rambus profits = .75 * 98MM
Rambus profits = $73.5MM

Earnings/share = $.735

RMBS stock price = 25 * .735
RMBS stock price = $18.38 (end of year target)
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