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

To: Ian Anderson who wrote (29050)	9/9/1999 10:26:00 AM
From: jackmore	Respond to of 93625

Ian, Where is the flaw in my logic? Logic looks ok. Assumption that PCs are only source of revenue is the problem. (But market may not see that yet either.) We've heard from Rambus that they expect a third of revenues from PCs. If we don't think that's credible we should not be long here, IMO. Regards, jack

To: Ian Anderson who wrote (29050)	9/9/1999 12:16:00 PM
From: ribman	Read Replies (1) \| Respond to of 93625

Where is the flaw in my logic? I thing the bigger flaw is that Wall Street has traditionally awarded ipr companies a higher PE ratio than high tech manufacturers. Since Rambus is fabless, I think the PE will remain higher than boxmakers, although if you look at Dell, the PE over the last two years hasn't been too shabby. I don't think the market for Rambus or similar dram products will be "mature" for many years. IMHO 40 would be a conservative PE for Rambus, which changes valuation pretty dramatically. Your analysis also seems to assume that Rambus technology will remain somewhat static, and they will not stay on the cutting edge in future generations, or that they will not expand more into other markets not now anticipated.

To: Ian Anderson who wrote (29050)	9/9/1999 1:38:00 PM
From: Tom Pulley	Read Replies (1) \| Respond to of 93625

Ian, good question and if only we could predict what the PE will be in 2002. My guess is that RMBS will be able to project 25-35% growth beyond 2002. The dram market over the long term should continue to grow 15-20% and RMBS should be along for the ride. Additionally, these are smart guys who hopefully can leverage their technology and patents into additional earnings. This is possible through new applications (Unclewest speaks of telecommunications). It may also be possible through slowly increasing average royalty as they upgrade the technology with new patents and more companies have to use their "standard". And of course, they will be generating lots of cash and can grow through acquisitions. So, if the market projects 25-35% growth beyond 2002, a company with exceptional margins and virtually no capital requirements should command a PE of 40-50. That puts the stock price in 2002 at 400-500. Of course who knows, these days when a stocks entire capitalization trades every 20 days or so, there may be enough excitement to drive the price up close to 1000. That would be OK too. But first things first, I'll feel more comfortable when Dell and Compaq are selling Rambus machines in quantity and the supply of DRAMS are there. Tom

To: Ian Anderson who wrote (29050)	9/9/1999 2:09:00 PM
From: unclewest	Respond to of 93625

Where is the flaw in my logic? ian, rambus ceo and cfo project pc's to be 35% of total revenues. for starters i suggest multiplying your end result x 3. next, doesn't a pe of 12 sound kinda low to you, especially since you project rambus will still be growing? then if rmbs just invested all of the earnings over the next few years @ 6% the added return will be hefty. unclewest try this....rmbs ceo projects rdram to be 50% of dram market in 2 years....dram market in 2 years should be between $59-60 billion....multiply $30 billion by 1.7%....divide by 25 million shares....add some $ for rimms and connectors, and license and engineering fees......smile....now you know why i am fishing!! back to lurk mode for a few days.