Rambus falls on IBM concerns
By Bloomberg News
Special to CNET News.com
June 1, 1999, 2:05 p.m. PT
Rambus, a designer of high-speed computer chips, fell as much as 13 percent on concern that IBM may choose a competing technology for its personal computers.
Rambus fell 10 to 67 1/2 in late trading, after touching 67 1/4. Yesterday, Cahners Business Information's Electronic News, citing unnamed sources, reported that IBM decided to drop support of Rambus technology in its personal computers in favor of a competing technology called PC-133.
IBM said today that it plans to use PC-133 in its low-end PCs to be introduced in the second half of this year, though higher-end expensive PCs and workstations released at the same time will be based on Intel computer chips and Rambus products. "It's no secret that IBM has been a supporter of PC-133, but they have not come out against Rambus," said David Wehner, a Hambrecht & Quist analyst who rates Rambus "market perform."
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Gary Harmon, Rambus chief financial officer, said that he expects the major supporters early on will be Dell Computer, the world's biggest direct-seller of PCs, and Compaq Computer, the No. 3 computer maker. "We didn't consider IBM to have considerable volumes this year," Harmon said.
Mountain View, California-based Rambus licenses its high- speed technology to computer memory and microprocessor makers and will receive royalties once production begins.
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Intel, the world's biggest semiconductor maker, is promoting Rambus technology to the computer industry and has given tens of millions of dollars to memory chipmakers to upgrade their factories. "We think it is highly unlikely that IBM will drop Rambus entirely," said Seth Dickson, a Warburg Dillon Read LLC analyst, who rates Rambus a "strong buy."
Intel needs to ensure that computer memory and other personal computer components keep up with the speed of its new microprocessors. It is using Rambus's technology in its new Camino chipset, which acts as an intermediary between a computer's memory and processor.
Copyright 1999, Bloomberg L.P. All Rights Reserved.
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