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

To: unclewest who wrote (26083)	7/31/1999 6:08:00 PM
From: grok	Read Replies (1) \| Respond to of 93625

RE: <But its revenue stream hasn't even begun yet. kz, imo, it certainly has. rmbs has no debt and is and has been profitable for some time. we are calculating future earnings acceleration here. rmbs has present earnings. and we know from the announced design wins that rmbs earnings are going up. i try to concentrate on the pace of the earnings ramp up. i have trouble seeing the angle sometimes. ever tried to gaze up a hockey stick? unclewest> What I meant was that its royalty revenue stream hasn't really begun yet. Last quarter royalty rev was $1.8M and I believe that this is all from the last generation Concurrent rdram instead of the new, intel-blessed Direct rdram which the current pe of ~300 is based on. Most of their current revenue is "Contract Revenue" which doesn't grow very fast. The fact that they are profitable under these circumstances is quite remarkable and I expect it is due to the business plan that they developed way back before the intel blessing came when they figured out how to live cheaply during the many years before royalty rev takes off big time. But the really interesting thing is that their "total cost and expenditure" last quarter was only $8.6M and there is no real reeason for it to increase very fast in the future. That level of engineering was enough to get them to the eve of the royalty ramp and so almost all future royalty rev will be profit! So it is like a dotcom in that it can scale to large revenue without large cost and have a huge return on invested capital. Any ideas on what roic will be?