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Technology Stocks : Rambus (RMBS) - Eagle or Penguin
RMBS 124.77-0.9%3:59 PM EST
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To: Ibexx who wrote (2857)1/27/1998 8:55:00 PM
From: Ibexx  Read Replies (1) of 93625
 
(Continued from previous post; H&Q update 1/27/98)

We believe this new chipset strategy is a positive for Rambus because:

1. Intel's potential offering of a chipset that supports multiple memory standards will allow Rambus to penetrate the higher volume, low-end PC segment earlier in its product life cycle rather than be restricted to the lower volume, high end of the market. We believe DRAM leaders such as LG Semiconductor will try to gain market share in the PC segment by aggressively pricing RDRAM at the low end of the market. LG has publicly stated that it plans to be aggressive on Direct-RDRAMby only charing a slight 5% premium over its SDRAM product offerings.

2 An intentionally smooth transition confirms Intel's long-term commitment to Rambus. Intel is taking on a leadership role by assisting the industry transition to Direct-RDRAMs for both its 32-bit CPU architecture family as well as its next generation 64-bit CPU family.

We believe the key motivation for Intel's slight alteration to its Rambus chipset strategy is that it will smooth the DRAM and PC industry transition from the SDRAM to the higher performance Rambus-RDRAM. We do not believe Intel's motivation for this new transition chipset is related to technical hurdles but believe that it is a marketing decision which wll prove more favorable for Rambus in the long run.

With the new Intel chipset interface specification, Rambus is expected to have a wider market penetration earlier in the product cycle (1998). However, we believe Rambus DIrect DRAM and SDRAM will co-exist for a few more years than we originally expected and therefore may change the royalty revenue profile for Rambus in the early years of its product ramp. In the long run, we continue to expect Rambus technology to have at least a 40% market share of the PC DRAM market in the year 2001.
______
Ibexx

PS: No change in BUY rating and previously stated price target.
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