Re: Rambus Annual Meeting - Part 1
I'm splitting this "essay' into parts - sorry for the long post.
First some preliminary, more personal, observations:
1. I am now retired. I was trained in electronics engineering and computer science, practiced digital design and programming for several years, transitioned through product management to sales/marketing, then to strategic planning and acquisitions for the balance of my career - always in high technology/scientific & medical applications. Thus I have some experience evaluating companies, in senior management thinking, and with the realities of getting things done in business..
2. I am long RMBS, and regard it as a potential "heritage stock". (The word "potential" refers merely to the fact that nothing in this life is a sure thing).
3. IMO Rambus management is on the level, competent, and in the process of executing a brilliant and sound strategic plan (i.e. (a) to develop an open industry-wide standard, with (b) rapid adoption, (c) shared R&D, and (d) a leveraged operating model = no fab, hence rapid increase in gross margin with volume).
4. The company must abide by certain legal and ethical constraints due to its being a publicly traded and listed company, and it must honor its agreements with other companies (e.g. Intel) as to confidentiality. It must also exercise common sense. High tech, volatile startups are sitting ducks for shareholder lawsuits instigated by law firms that specialize in shaking down such companies.
5. It is not the business of Rambus management to address the stock price behavior in the short term. Their job is to build a strong, lasting, successful business - everything else will stem from that.
6. And one final personal opinion: the recent dip is not the result of machinations by MMs, Rambus management or any other bogeyman. It is merely the correction of a premature runup, and it happens all the time. I expect this stock to double every year for the next eight years (check the charts of CSCO, MSFT. DELL, whoever), with plenty of 30+% dips along the way. Even with the PE coming down from 300 to 50, that's still a $2,000 stock. You won't be able to see the difference between (a split-adjusted) $75 and $110 on that chart. So, if you can't sleep nights, wait a year. You'll still make plenty of money if you get in when it's at $200, or $400.
In the following report, I will be try to be concise, as a lot of the ground has already been covered by Dave B., unclewest and Woodside.
to be continued - Bernard |
