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

To: FLSTF97 who wrote (30107)	9/21/1999 4:10:00 PM
From: Richard Habib	Respond to of 93625

Your points are valid and have been discussed. The most important consideration is how much potential has already been priced in. I agree with you as do others that RMBS growth rapidly approaches that of the DRAM market. Semico research numbers show the DRAM market in 1995 of $40B, 1996 of $25B, 1997 of $20.1B, 1998 about $14B, 1999 somewhere between $19B & $25B, rising to about $65B in 2003 if you believe optimistic numbers given by Unclewest. Thus growth has been stagnant for 3 years. Growth 95-2003 about 7% annualized. Growth 96-2003 about 20%. Assume 90% share in 2003, assume 1.5% royalty, assume 60% gross margin and 25M shares, assume 35% tax rate. 65B x .9= 58.5B x .015 = 877.5M x .6 = 526.5M x .65 = 342.2M /25M = 13.69 per share earnings. Reasonable PE given DRAM market growth and high margin would be 25-30 = 342-410 call it 375. Presently RMBS has 25% of its growth included. Conclusion is that RMBS under best case is about a 300% gain in 1-2 years depending when the market discounts the majority of growth.