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

To: wily who wrote (32490)	10/21/1999 1:58:00 PM
From: Alan Bell	Read Replies (1) \| Respond to of 93625

re: What return can we expect from 2006 onwards? How will Rambus be making money then? Remember that Rambus has over 50 patents. It looks like they have been enough ahead of new Ram technology that they have been able to capture many of the key ideas for high speed communication to Dram. I have a hard time believing that any future DRAM architecture, say in 2006, isn't going to infringe on Rambus IP. -- Alan

To: wily who wrote (32490)	10/21/1999 2:30:00 PM
From: richard surckla	Read Replies (1) \| Respond to of 93625

Gees Wily... 2006!!! (Q) >How will Rambus be making money then?< (A) Who cares?

To: wily who wrote (32490)	10/21/1999 3:46:00 PM
From: Mohamed Saba	Read Replies (1) \| Respond to of 93625

Wily please go to yahoo and look up the PE and Ret on Equity figures for some of your favorite companies. You will find the data under "Profile". The PE is not equal to ROE. Also look up the book value. MSFT has a book value of $5.37/share. Per your way of evaluating stocks MSFT would be about $20. Intel, and just about any hi tech company for that matter, will not derive a penny from their current products five years from now. Rambus will, however, because of their patents. I also sure hope that they are, just like other hi tech companies, continuing to develop more products and ideas. Yes DRAM tech changes every few years, BUT: The DRAM idea is about 30 years old. It has come a long way with improvements in processes, CMOS, circuit design, etc.. Most, and may be all, those improvements came at small incremental steps. The Rambus way is a major new development, and, That DRAM's represent a bottleneck in PC's is a problem known for over 10 years. The Rambus technology, as a concept was developed about 10 years ago (may be a little less). Today 10, or so, years later you find people saying it will never work. If somebody has a major better idea today, then you may see it in 2010 in a PC. And there is a chance that better idea may come from good old Rambus. Mohamed

To: wily who wrote (32490)	10/22/1999 2:39:00 AM
From: Double_Eagle	Read Replies (1) \| Respond to of 93625

Wily - As Mohamed wrote, PE is not at all equal to ROE. Although you may argue that it should be, that is a totally seperate discussion re: valuation, but PE has not been anywhere near ROE for a long time (and I would argue that there is no necessary correlation between a backward looking metric - ROE - and a forward looking expectation - PE). For a few benchmarks of PE: INTC: 33 DELL: 63 LU: 64 CPQ: 28 CSCO: 112 MSFT: 61 Avg: 60 Yes, these #'s are skewed because of CSCO. And yes, these companies are currently in different competitive situations than RMBS. But I would argue not for long. Certainly not as RMBS becomes a Gorilla, or a King, as Unclewest has been arguing on that thread. So, the $9 that RMBS earns per share by 2003 (Mohamed's $15 x .6 assuming a conservative 40% tax rate) at 60 PE = 540. Or, 9x30 PE = 270. Even this very conservative 270 on a multiple of 30 implies a present value (assuming a very high discount rate of 20%) of 130. So, if you're comfortable with a 30 multiple (i think this is very conservative) and a 20% discount rate (extraordinarily high considering how far RMBS tech. has come), today's value is near 130, or double today's market cap. sounds like a risk adjusted no-brainer to me. - double eagle