Rambus Rises as Intel Expected to Use Technology (Update1)
Bloomberg News
February 22, 1999, 10:35 a.m. PT
(Adds analyst comment in 4th paragraph, detail after 7th
paragraph. Updates share price.)
Mountain View, California, Feb. 22 (Bloomberg) -- Shares of
Rambus Inc., a designer of high-speed computer chips, rose as
much as 17 percent on expectations that Intel Corp. will use
Rambus' technology in its next wave of computer chips.
Rambus shares rose 11 1/2 to 82 1/2 in midafternoon trading
of 2.4 million shares, more than double the three-month daily
average. It rose as high as 83. Its shares rose 16 percent on
Friday.
Intel is expected to announce tomorrow that Rambus' chip
technology will be used in its high-powered chips, which will be
available later this year, analysts said. The Mountain View,
California-based company designs and licenses high-speed
technology to computer memory and microprocessor makers such as
Intel, NEC Corp., International Business Machines Corp. and
Samsung Electronics, and earns a royalty from their sales.
''Intel appears to be extremely committed to the technology
and it is one of its most important projects this year,'' said
Mark Edelstone, an analyst at Morgan Stanley Dean Witter & Co.,
who rates Rambus ''outperform'' and expects the company's share
to rise to $110 within a year.
Expectations that Intel is committed to using the company's
technology also boosted the expectations of other analysts.
Rambus was raised to ''buy'' from long-term ''attractive''
by analyst Daniel T. Niles at BancBoston Robertson Stephens Inc.
Niles predicts the stock will reach $90 a share in a year.
The stock was rated ''strong buy'' by Warburg Dillon Read
Inc. analyst Gregory Mischou, who officially began covering the
company today and has a target price of $150 a share.
Rambus shares plummeted last month after the company said
earnings would stagnate for two or three quarters because of
falling royalties and increased expenses connected with bringing
its technology to market.
Its shares reached a record 109 15/16 on Jan. 8, a ninefold
surge from the initial public offering price of 12 in May 1997.
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