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

To: grok who wrote (28687)	9/3/1999 8:00:00 PM
From: George the Greek	Respond to of 93625

Very interesting scenario regarding supply chain imbalance with respect to RDRAM supply. Sounds very plausible. Plausible enought to happen. As you mention, there is a constellation of micro decisions being made as the industry transitions, and, despite all good intention and planning, who can guarantee that it will all go smoothly??? Thanks for the food for thought. George

To: grok who wrote (28687)	9/3/1999 8:48:00 PM
From: Dave B	Respond to of 93625

KZ, It definitely could happen. Supply/demand imbalances are somewhat self-regulating, though, since a shortage of RDRAM parts (which, BTW, implies a strong demand, which would be a reasonably good thing) would cause lead times for PCs with those parts to be extended. That is, your Dell rep would tell you that it would be 6-8 weeks to get the Optiplex GX200 versus 5 days to get the Optiplex GX100. The bad news, I agree, would be that we would lose some orders that we might otherwise have gotten, if enough RDRAM could be produced. But under this scenario, the good news is that the DRAM mfrs. are selling every single chip they can produce, and Rambus is getting royalties from every one. This shortage can also be positioned positively to the customers (as most PC companies would) that "those are very popular systems", which equates to "everyone wants one". I do disagree with your one statement that everyone would be blaming Rambus. If any blame is to fall (as opposed to the "they're flying off the shelves" positive scenario) I suspect most people will blame the DRAM companies for not producing enough. JMO, Dave

To: grok who wrote (28687)	9/3/1999 10:04:00 PM
From: Jdaasoc	Read Replies (4) \| Respond to of 93625

KZNerd: I wondered why Rambus had to huddle with their licensees to discuss changes to the RAM chip designs that the licensees paid dearly for the right to manufacture. I see that as a sign that there is a great degree of difficulties in delivering the volume amounts of RDRAM necessary to keep RMBS stock on high side of it's trading range. Imagine if ColaCola bottlers met with Coke management to discuss the reformulation of it's beverage. I am amazed at the degree of forgiveness that the market is allowing RMBS in terms of stock pricing. The potential for RMBS must be great based on the stock price we have seen over last 12 months. However, it could be the nature of the typical RMBS long who continually buys more stock at the sign of any downturn. I see the next difficulty to be faced as mentioned by responses to my post is that of supply and demand. I believe that demand for the added speed of RDRAM will be large. It will exceed supply for a minimum of at least 6-9 months based on the manufacturing information we have now. RMBS optimists would state that would be the greatest thing in the world for RMBS stock price. They would cite the how overwhelming demand would naturally propel stock to outrageous new 52 week highs. I myself can't see any advantages to having Dell ration, delay, or apologize for non delivery of RDRAM systems as a good thing. It looks like another likely black eye for RMBS when delivery of RDRAM systems fails to occur in quantity in October. In the era of rich stock evaluations however, missing earnings marks consistently is usually a horrible thing in terms of effect on stock price. RMBS has fumbled the ball several times over the last three years and at some point the opposition, PC133 or DDR, could score some points against the stiff defense put up by Intel in RMBS's behalf. The stark reality of the near term earnings situation causes our large pullbacks from any of the rallies we have had in the last twelve months. The only analogies I can think of is that of AAPL or NOVL. Even in the worst of times in their overwhelming losing struggles with their respective competitors for market share, they still hung with the vision for their companies until market conditions changes. I see the RMBS investor will have to wait patiently for their ship to come in sometime in 2000 or 2001 when earnings justify the current price multiple. john