Hi Web Myst; As far as holding RMBS long term, I'm on record as betting that it will end the year below $18.84, and I still feel very comfortable with this bet. In addition, I predicted that it will be in the low single digits (i.e. $3 ~ $4) before April of 2002, and I feel very comfortable about this as well.
It's my expectation that Rambus still has a lot of shoes left to drop:
(1) The stock is trading at a very high multiple of recent quarter's earnings and the CEO has predicted that the next 3 quarters will be about zero. The stock could get to $3 just based on these figures. With earnings of around 5 cents per share over a 12 month period, 30x earnings could put this stock at $1.50 per share.
(2) The company is still being sued all over the world, and their litigation history isn't too good. Infineon just wanted to get out of Virginia with a wash, and was willing to settle that way before trial, but they got the jury to award them $3.5 million. The judge reduced that to match the law, but think about it. That's 3.5 cents per share, and Infineon didn't even bother to demonstrate any "reasonable" legal expenses or actual damages. Micron is going for blood, not just a settlement, and has hired the best lawyers in the world. Micron may obtain a settlement that would bankrupt Rambus.
(3) You have Jdaasoc posting that the i845 is going to eliminate the 850 the same way that the 815 eliminated the 820. He's a long term RMBS lover from way back and is still invested in the stock, (I think). He's in the business of reselling computers and is very well connected into the channels where the bulk of computers are sold. This kind of information doesn't bode well for RDRAM.
(4) We still haven't seen any shareholder lawsuits, but they could start showing up at any time. I would have thought we'd already have them, due to the fraud conviction, but we haven't. If they do spring up, it's going to be another drain on company funds (and management time), and the stock is going to take another tumble.
(5) The rate at which new DDR products are being announced has increased substantially since even a few months ago. That's all kinds of things from set top boxes to HDTV controllers to network equipment. These are all market niches (like graphics) that RDRAM was supposed to be in control of by now. TeamDDR isn't make much publicity for all this because they know they've already won the hearts and minds of design engineers (like me), but it's only a matter of time before the fact that DDR is the next mainstream memory will be obvious to everybody.
(6) The next few months are supposed to see DDR chipsets for the P4 from ALi, SiS and VIA. Nvidia's Crush chipset for the Athlon is supposed to provide great performance and samples are supposedly in the hands of reviewers. If any of those DDR chipsets (did I leave off Serverworks, AMD, Intel, Apple and ???) end up being very attractive, the reviews could dump RMBS further.
(7) Legal expenses are still rising, and worse, the number of court cases isn't decreasing. Instead, cases are being dragged out all over the world. Rambus was saying that these cases would be over quickly and that their legal expenses would be about $5 million per quarter. But the cases must be costing a lot more, and are clearly going to take years.
(8) The drop in RDRAM prices are tough on Rambus' revenue, and since they are having difficulty with their legal results the SDRAM and DDR royalties are in trouble. If RDRAM shipments are reduced by Intel's reliance on the 845 at the same time that RDRAM pricing drops, the result for Rambus would be losses, especially with the high legal costs.
But best of luck, and be sure and tell us when you actually make purchases.
-- Carl |
