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13F Advance: Loews Opens Rambus Stake
FFBN SOURCE: SEC 13F
FILER: Loews Corp.
QUARTER ENDED: 03/31/1999
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Loews Corp. Opens Rambus Stake
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Stock On Roller Coaster As Intel Nears Decision On Technology
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A Report From The Federal Filings Investment Research Group
July 8, 1999
=======================================================================
MANAGER CONTACT: Barry Hirsch, Senior Vice President
New York, NY
(212) 545-2920
INVESTMENT PHILOSOPHY: VALUE
EQUITY PORTFOLIO SIZE: $8.46 billion* NUMBER OF STOCKS: 44*
*Excludes option positions.
Loews Corp. is the holding vehicle for brothers Laurence and
Preston Tisch, who together own approximately 30% of the outstanding
shares. The Tisches are well-known value investors, who favor down-
and-out firms which they can rebuild and then sell at a significant
profit.
FOCUS: Rambus Inc. (RMBS)
Recent Price: $88.81 FY99 EPS (E): $0.28*
52-Week H/L: $110-39 FY00 EPS (E): $0.85*
Price/Book: 41.1x FY99 P/E (E): 317.2x
L-T Debt/Cap: nil FY00 P/E (E): 104.5x
Div/Yield: nil 5-Yr. EPS Gr.(E): 62.5%*
Shares Out: 23.31M S&P 500: 1395.86
Note: Fiscal Year Ends in September
*Source: Zacks Investment Research
Loews Corp. continued its mining and drilling investments in the
first quarter, opening a huge 70.1 million share stake in Diamond Offshore
Drilling Inc. (DO), making the deep water driller its top holding by market
value. The money manager also opened a new stake in driller EEX Corp. (EEX)
and in mining company Great Central Mines Ltd. (GTCMY), while increasing its
position in Stillwater Mining Co. (SWC).
Outside of those two industries, Loews established new positions in
E.I. Du Pont de Nemours & Co. (DD), Minnesota Mining & Manufacturing Co.
(MMM) and Rambus Inc. (RMBS).
Rambus makes high-speed chip-to-chip interface technology that
enhances the performance and cost-effectivenes of computers, consumer
electronics and other electronic systems. The firm licenses semiconductor
companies to manufacture and sell memory and logic integrated circuits
incorporating Rambus interface technology. The technology cost-effectively
increases the data transfer rate, allowing semiconductor memory devices to
keep pace with faster generations of processors and controllers.
In an effort to establish its interface technology as an industry
standard, Rambus does not make or sell semiconductors incorporating its
technology. The firm licenses its technology on a nonexclusive and
worldwide basis to chip companies which manufacture and sell RDRAMs and
logic integrated circuits containing Rambus ASIC cells (RACs) to systems
companies that have adopted Rambus technology
Revenues consist of contract fees and royalties. Contract fees
accounted for approximately 76% of the firm's $37.9 million total revenues
in the fiscal year ended Sept. 30, 1998 and include license fees,
engineering services fees and nonrefundable, prepaid royalties.
Royalties represent the remaining revenues and are a percentage of
revenues received by a licensee on its sales of Rambus ICs. For a typical
application of its technology, Rambus receives royalties from the sale of
both RDRAMs and logic ICs containing RACs. Royalty rates range up to a
maximum of approximately 2.5% for RDRAMs and approximately 5% for logic ICs.
As the company's ICs are incorporated into additional applications,
royalties are expected to become an increasing portion of revenues over the
long term. Rambus expects substantial additional royalties should be
generated when the first Rambus-based ICs for PC main memory applications
reach the market and the Sony PlayStation II game console goes into
production. Until that time, however, royalties are unlikely to increase
because demand for the Nintendo 64 game units, which comprise a large
proportion of current royalty revenues, will likely fall seasonally and
there are no new major sources for royalties in the interim.
Japanese and Korean companies have accounted for the majority of
Rambus's revenues in the past. International revenues were 73% of total
revenues in fiscal 1998, 80% in fiscal 1997 and 86% in fiscal 1996. Despite
the heavy sales to Asian companies, Rambus does not consider itself to be
abnormally vulnerable to problems in the Asian economies because a large
portion of future contract revenues will be based on nonrefundable payments
of license and engineering fees which have already been received from Asian
licensees but not yet recognized. In addition, royalties are generally
based on sales of Rambus ICs by licensees to system companies located in the
U.S., Japan and Taiwan.
Shares of Rambus peaked in early January at almost $110.00 per
share, then fell during the first quarter to just above $60.00. After a
brief rise, the shares fell back below $60.00 in late April and early May
before staging a strong move back to near $100.00 in June.
The roller coaster ride of the past six months was due to
uncertainty about whether Intel Corp. (INTC) would support Rambus's RDRAM
technology in its microprocessors. This has been the key factor influencing
Rambus's stock price since it went public in 1997. It is still not
absolutely certain that Intel will use RDRAM in its next-generation PC
chipset later this year. This use of RDRAM technology would greatly
increase revenues and release Rambus from being tied to game console
revenues, which are highly seasonal and unpredictable.
Confidence in Rambus was boosted in early June when Micron
Technology Inc. (MU) said it shipped samples of memory chips using RDRAM to
Intel. On the day following the announcement, Rambus's stock soared 12.7%
to $87.75.
Intel has been indicating a September launch of its Rambus-based
chipset and Rambus expects major volume shipments of RDRAM ICs for the PC
market to start in the December quarter with royalties following in the
March 2000 quarter. Additional expenses to support the launch are
anticipated, so Rambus expects earnings to be no better than flat compared
with its second quarter results through the rest of calendar 1999.
In the second quarter ended March 31, Rambus earned eight cents per
share, up a penny from the second quarter of fiscal 1998. Revenues inched
up to $9.9 million from $9.7 million.
Rambus has a strong balance sheet, with no long-term debt at March
31 and cash and marketable securities of $83.4 million.
Kevin E. Donovan
Senior Investment Analyst
(202) 393-7402
E-mail: kevin.donovan@fedfil.com
SIGNIFICANT FIRST QUARTER CHANGES
MARKET PRICE
NEW POSITIONS: VALUE SHARES RECENT RANGE 52
($ MMs) OWNED PRICE QTR WEEK
DIAMOND OFFSHORE DRILLING $2,216.9 70,100,000 29 34-20 41-20
FDX CORP. 9.3 100,000 53 50-38 62-22
DU PONT (E.I.) DE NEMOURS 4.1 70,000 70 60-50 80-50
MINNESOTA MINING & MFG. 3.5 50,000 91 91-69 96-66
RAMBUS INC. 2.6 40,000 88 110-61 110-45
EEX CORP. 2.4 492,333 7 8-5 28-5
GREAT CENTRAL MINES LTD. 1.4 1,559,195 3 3-2 3-2
MINE SAFETY APPLIANCES CO .8 14,000 66 75-53 87-51
UCAR INTERNATIONAL INC. .3 20,000 25 20-14 31-12
(MORE) FEDERAL FILINGS-DOW JONES NEWS 07-08-99
11:14
07/08/99 11:14
13F Advance: Loews Opens Rambus Stake (CONT)
HANOVER COMPRESSOR CO. .3 10,000 32 28-19 36-18
MARKET PRICE
ELIMINATED POSITIONS: VALUE SHARES RECENT RANGE 52
($ MMs) SOLD PRICE QTR WEEK
SUNAMERICA INC. $8.6 105,477 Merged w/American Int'l
DELTA AIR LINES INC. 4.2 80,000 60 72-49 72-41
CBS CORP. 3.1 95,000 45 42-32 47-18
NIKE INC. CL B 1.2 30,000 56 64-39 67-31
AMOCO CORP. 1.2 20,000 Acq. by British Petroleum
ALARMGUARD HOLDINGS INC. .6 76,080 Acq. by Tyco Int'l Ltd.
ABR INFORMATION SERVICES .6 30,000 28 25-17 100-9
THERMOTREX CORP. .4 43,000 8 9-5 19-5
AMERUS LIFE HOLDINGS INC. .2 10,000 27 25-16 33-14
ANGEION CORP. .2 153,600 2 NA 3-1
TOP PURCHASES BY MARKET VALUE
VALUE
SHS PURCH SHARES SHARES
($ MMs) PURCHASED OWNED
DIAMOND OFFSHORE DRILLING INC. $2,216.9 70,100,000* 70,100,000
FDX CORP. 9.3 100,000* 100,000
GREAT CENTRAL MINES LTD. ADR 4.1 1,559,195* 1,559,195
DU PONT (E.I.) DE NEMOURS 4.1 70,000* 70,000
STILLWATER MINING CO. 3.6 136,650 413,750
MINNESOTA MINING & MANUFACTURING 3.5 50,000* 50,000
CNA SURETY CORP. 3.5 302,400 156,758,880
RAMBUS INC. 2.6 40,000* 40,000
EEX CORP. 2.4 492,333* 492,333
IMC GLOBAL INC. 2.0 100,000 129,999
MINE SAFETY APPLIANCES CO. .8 14,000* 14,000
PLACER DOME INC. .4 40,000 915,000
UCAR INTERNATIONAL INC. .3 20,000* 20,000
HANOVER COMPRESSOR CO. .3 10,000* 10,000
THERMEDICS INC. .3 35,700 175,700
* denotes new position
TOP SALES BY MARKET VALUE
VALUE
SHS SOLD SHARES SHARES
($ MMs) SOLD OWNED
SUNAMERICA INC. $8.6 105,477* 0
BARRICK GOLD CORP. 8.5 496,400 1,318,800
DELTA AIR LINES INC. 4.2 80,000* 0
CBS CORP. 3.1 95,000* 0
GETCHELL GOLD CORP. 1.8 68,000 302,500
NIKE INC. CL B 1.2 30,000* 0
AMOCO CORP. 1.2 20,000* 0
CHUBB CORP. .8 14,000 20,000
ALARMGUARD HOLDINGS INC. .6 76,080* 0
ABR INFORMATION SERVICES INC. .6 30,000* 0
TEXAS INDUSTRIES INC. .6 23,100 50,000
THERMOTREX CORP. .4 43,000* 0
COLTEC INDUSTRIES INC. .4 20,000 40,000
AMERUS LIFE HOLDINGS INC. .2 10,000* 0
ANGEION CORP. .2 153,600* 0
AGNICO-EAGLE MINES LTD. .2 30,000 1,300,000
BE AEROSPACE INC. .1 10,000 30,000
TJ INTERNATIONAL INC. .0 1,000 30,000
* denotes eliminated position
GREATEST PERCENT CHANGE IN SHARES OWNED FROM PREVIOUS QUARTER
MKT VAL MKT VAL CHANGE
PURCHASES: SHARES SHS PURCH SHARES SHS OWNED SHS
PURCH ($ MMs) OWNED ($ MMs) OWNED
IMC GLOBAL INC. 100,000 $2.0 129,999 $2.7 333.3%
STILLWATER MINING CO 136,650 3.6 413,750 10.9 49.3%
THERMEDICS INC. 35,700 .3 175,700 1.2 25.5%
PLACER DOME INC. 40,000 .4 915,000 10.2 4.6%
CNA SURETY CORP. 302,400 3.5 156,758,880 1,789.3 .2%
MKT VAL MKT VAL CHANGE
SHARES SHS SOLD SHARES SHS OWNED SHS
SALES: SOLD ($ MMs) OWNED ($ MMs) OWNED
CHUBB CORP. 14,000 $.8 20,000 $1.2 41.2%
COLTEC INDUSTRIES 20,000 .4 40,000 .7 33.3%
TEXAS INDUSTRIES INC. 23,100 .6 50,000 1.2 31.6%
BARRICK GOLD CORP. 496,400 8.5 1,318,800 22.5 27.3%
BE AEROSPACE INC. 10,000 .1 30,000 .4 25.0%
GETCHELL GOLD CORP. 68,000 1.8 302,500 7.9 18.4%
TJ INTERNATIONAL INC. 1,000 .0 30,000 .7 3.2%
AGNICO-EAGLE MINES 30,000 .2 1,300,000 7.0 2.3%
TOP TEN HOLDINGS BY MARKET VALUE
HOLDING CHANGE
VALUE SHARES SHARES
($ MMs) OWNED OWNED
DIAMOND OFFSHORE DRILLING INC. $2,216.9 70,100,000 70,100,000
CNA SURETY CORP. 1,789.3 156,758,880 302,400
HOMESTAKE MINING CO. 22.7 2,634,600 0
BARRICK GOLD CORP. 22.5 1,318,800 (496,400)
USG CORP. 11.3 220,000 0
STILLWATER MINING CO. 10.9 413,750 136,650
PLACER DOME INC. 10.2 915,000 40,000
FDX CORP. 9.3 100,000 100,000
GETCHELL GOLD CORP. 7.9 302,500 (68,000)
ARCHER-DANIELS-MIDLAND CO. 7.6 515,006 0
13F Advance is designed to provide factual information with
respect to the subject matter covered but its accuracy cannot be
guaranteed. Federal Filings, Inc. is not a registered investment
adviser, and under no circumstances shall any of the information
provided herein be construed as a buy or sell recommendation or
investment advice of any kind.
Inquiries about the product should be directed to Kevin E. Donovan,
Senior Investment Analyst, (202) 393-7402.
FEDERAL FILINGS CONTACTS: (202) 393-7856 for Editorial,
(202) 628-8990 for Newswire Sales,
(888) FED-FILE for Technical Support
fedfil.com
(END) FEDERAL FILINGS-DOW JONES NEWS 07-08-99
11:14
07/08/99 11:14
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