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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (23693)	6/25/1999 3:39:00 PM
From: Dave B	Read Replies (1) \| Respond to of 93625

Zeev, It's only a positive for Rambus if the % increase in demand is greater then the % decline in price, indicating that demand is elastic. I don't believe that that's the case. As an example, if SDRAM prices decrease 20%, I don't think we're going to see a 20% increase in SDRAM demand because the entire PC-system price is not going to decline 20% (the prices of the other components are not decreasing as rapidly). Add-on sales of SDRAM will not increase enough to balance this lack of PC growth. Having said that, I don't think that SDRAM price declines will affect the DRDRAM prices much initially because we are capacity constrained (I know many of the bears will argue that there's no demand for DRDRAM, but we'll ignore that for now). The DRDRAM vendors will be able to charge almost whatever they want initially. SDRAM prices are falling because capacity outstrips demand. Dave