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

To: Gary105 who wrote (26131)	8/1/1999 10:37:00 AM
From: grok	Respond to of 93625

RE: <as revenues mount so will expenses, albeit at a rate less than revenues. to avoid obsolescence company must reinvest in r&d; to increase sales and keep customers satisfied, sales and customer service expenses will increase. i think expenses in 2001-2 timeframe will be at least 2x, more likely closer to 3x.> What you say it true for normal companies but rambus is far from normal. Their customer list is quite small and they only need to seed each customer with design technology and then the customer takes over and does the real design and maintainence. And they've already done almost all of this for the Direct Rambus generation which will likely produce revenue for maybe 10 years without any modifications or upgrades needed. It is true that some day they will need a second generation but it is mot clear that it will cost more than the first generation. In fact I wouldn't be surprised if a large part of last quarters $8.6 cost was working on the next generation since the current generation is already a done deal. In some ways rambus resembles microsoft which develops an OS and then sends a CD to each OEM who then installs it on every PC and sends checks to msft. Except rambus' development cost are far, far less.