Yo_"BUSSERS"..............
This link has some preety good thoughts about Rambus (And other picks as well on the home page).
tsrec.com
#4. Rambus
NASDAQ: RMBS
Initial Recommendation - 12/98:
A major problem in the configuration of personal computers deals with the number of commands that can be sent from the microprocessor of the computer to its RAM at any given time. The problem's so great that Intel predicts that without new technology, an increase in microprocessor speeds will soon be inconsequential in increasing the overall speed of a PC. Not only does Rambus, an intellectual property company, have the "new technology" to deal with this problem, they have a virtual monopoly on it through a series of US Patents. Like ARM Holdings, Rambus doesn't involve itself in the low-margin business of producing chips; all they have to do is license their technology, and then sit back and collect the profits. Customers of their products include Intel, Motorola, and Samsung, with Dell, Compaq, and IBM planning to buy next year. This company has an expected 5-year growth rate of 75%, and given that Intel has stated that they expect Rambus technology to be embedded into all of their microprocessors within a year, that number could be even higher. Also, given their track record, there's always the chance that Rambus may come up with a new breakthrough sometime soon. Even if all they do is just improve on past innovations, I'd be very surprised not to see them as one of the top 25 high-tech companies of the early 21st century.
An Update - 11/19/99:
To say that Rambus hasn't had a smooth year is like saying that Mike Tyson isn't a good role model. They've had numerous chip delays holding back the release of RDRAM, the DRAM chips based on Rambus' technology. First it was problems with RDRAM itself, and then it was incompatibility issues with Intel's 820 chipset, the first motherboard chipset meant for desktops that supports RDRAM. Finally, on November 15, months later than expected, RDRAM-based PCs make their debut, but not before Intel had announced chipset support for a competing DRAM technology known as PC133. So why do I still recommend Rambus? Because, quite simply, they still have by far, the best DRAM technology out there. Winbench tests showed that RDRAM-based PCs blow away computers with competing types of DRAM when it comes to applications that require large amounts of data to be transferred from the PC's DRAM to its microprocessor in a short amount of time, applications such as Adobe Photoshop, AutoCAD, 3D gaming, streaming video, and most important of all, multitasking. Furthermore, RDRAM's uses aren't limited to PCs. Compatibility with Intel's 840 chipset is allowing it to make strong inroads into the server and workstation market, and laptop proliferation shouldn't be too far away. Sony's licensed it for its Play Station II, and in the future, RDRAM has a good chance of being used in digital set-top boxes, PDAs, smart phones, switches and routers, digital cameras, and in any other device that requires data to be quickly transferred to and from its DRAM module.
One complaint about RDRAM has been the fact that it's more expensive than competing technologies, costing 25-30% more. While this may sound like a lot, it isn't much when considering its minimal effect on the overall cost of an entire PC, server, laptop, or workstation; and given the price/performance benefits derived when compared to those reached by paying for a faster CPU, it's not a bad deal to say the least. Also, RDRAM costs are expected to come down over time, further marginalizing this issue.
DRAM sales are expected to top $70 billion in 2003. RDRAM has a good chance of taking over 50% of this market by then, and Rambus gets a 1.5% royalty for everychip using their technology. Given the low costs of running a royalty-based business, profit margins of over 80% are very likely. As for how much Rambus gets in potnetial profits if these estimates hold true, I'll let you do the math for yourselves, and if you do take the time to do it, I'm sure you'll like the numbers that you'll get.
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