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

To: Lee who wrote (35452)	11/30/1999 9:36:00 PM
From: Jdaasoc	Read Replies (1) \| Respond to of 93625

Lee: In December 2001 where do you see the RMBS price point? Where do you see RMBS growth rate? How about the PE? My crystal ball is broken but I am willing to work from the other direction using latest estimates for computer sales. 120 M computers sold in 2000 40% in class that is addressed by RMBS 0.4 * 120 M computers or 48 M computers RMBS gets 10% of market in Jan leading up to 50% of market in DEC they average 30% for entire year 0.3 * 48 M or approx.15 M computers with RDRAM inside I assume 384 MB(mostly 512 MB machines at beginning) @ $4 / MB or $1500 for average royalties at beginning of year to 192 MB (mostly 128 MB machines at end of year) @ $2.5 /MB or $500 for average royalties at end of year or average during whole year of $1,000 per computer on which PC royalties due RMBS 15 M computers * $ 1000/ computer or $ 15 B in RDRAM sales Sony PSII sells 12 M units with $75 of RDRAM inside or $ 900 M in PSII royalties; add in $ 100 M from everyone else including licensing fees I am assuming that Intel pays nothing measurable in chipset royalties since no one has indicated otherwise and in addition 90% of current RMBS book value is derived for Intel's major investment in RMBS. For comparison, Intel currently paid about $1 M in royalties in last fiscal year for 4 MB video memory modules(concurrent RDRAM) on a mobo based on the LX chipset. total royalities = 0.015 of $16 B or $ 240 M 0.8 * gross margin * $ 240 M = $ 192 M profit before taxes 0.6 net after taxes * $ 192 M = $120 M profit $ 120 M profit /25 M shares including Intel warrants and employee options for Tate et al = $4.8 /sh Even Insurance Company rates a P/E of 10 worst case $48 Best case P/E of 60 or $ 288 john