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Technology Stocks : RAMBUS (Nasdaq: RMBS) - THE EAGLE -- Ignore unavailable to you. Want to Upgrade?

To: REH who wrote (106)	12/2/1999 4:18:00 PM
From: Allen champ	Respond to of 2039

Overheard: Debut of New Memory Chip Doesn't Help Rambus Shares By AARON ELSTEIN THE WALL STREET JOURNAL INTERACTIVE EDITION It's been a tough couple of weeks for shareholders in Rambus, a company that designs computer memory chips. Shares of the Mountain View, Calif., company have skidded 19% despite the long-delayed debut on Nov. 15 of its advanced memory technology for use with high-speed computer processors. The company, which had been working with semiconductor giant Intel to co-develop and promote the Rambus memory technology as the standard for personal computers, was expected to get a boost after the release. Instead, the stock has been drifting lower. It closed at 70 1/4 Wednesday on the Nasdaq Stock Market, down from 86 15/16 on Nov. 15. The stock had peaked at 115 1/4 during the summer. Intel is using Rambus memory technology in chip sets that accompany its new line of Pentium III processors. Compatibility problems had forced Intel to delay the release of the Rambus-based chip sets for months. The delay was a setback for several computer-makers, including International Business Machines, Dell Computer and Hewlett-Packard, who planned to equip desktops with the Intel chip sets. But is it hurting Rambus as well? Analysts said Rambus' stock has faltered because acceptance of its new memory technology -- though faster -- could suffer because it costs considerably more than the current industry-standard memory-chip. Meanwhile, with other alternatives on the horizon, many chip makers might be reluctant to go forward with Rambus-based products, said Ashok Kumar, an analyst at U.S. Bancorp Piper Jaffray. But investors, who are debating the stock's decline and the company's prospects on Internet message boards, are wondering whether the problems that delayed the Rambus chip have soured the company's relations with Intel. "It's a possibility that can't be ruled out," one participant wrote on a Silicon Investor message-board (www.siliconinvestor.com). "I have this eerie feeling like there is a boom about to drop," said another. Intel, the titan of the chip industry, has based its products around Rambus memory technology for three years. But the company recently decided to support other rival memory technologies. Intel spokesman Michael Sullivan denied the company is pulling away from Rambus. He noted that Intel has two chip sets that use Rambus' new technology. "How much better can you get than that? Ultimately, of course, it's up to the marketplace to decide if it wants" the chips, he said. Rambus officials didn't immediately return telephone calls for comment on Wednesday. However, some industry analysts said the relationship between the companies is solid. "Intel remains fully committed to Rambus," said Seth Dickson, an analyst at Warburg Dillon Read. Mr. Dickson said Intel might use Rambus memory technology to make chip sets for more powerful and expensive computers and cheaper technology for less-costly computers. "There used to be just one market, but now a second is evolving rapidly," he said. "Intel realizes that, and is using Rambus for its high-end chips. That's why some people may think they're stepping back from Rambus." But Dan Niles, an analyst at BancBoston Robertson Stephens, disagreed. "Based on their actions, opening up the field to rival designs, you'd have to say that Intel is stepping back from Rambus," he said. Mr. Niles recently downgraded Rambus' stock to "market performer" from "long-term attractive" and pared his year 2000 earnings estimates to 47 cents per share from 75 cents. Rambus earned $8.7 million, or 35 cents per share, for the fiscal year ending Sept. 30, compared with a profit of $6.8 million, or 28 cents a share, the previous year. Revenue rose to $43.4 million from $37.9 million.