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

To: Dave B who wrote (42134)	5/12/2000 4:30:00 PM
From: Ian Anderson	Read Replies (2) \| Respond to of 93625

I'm inclined to believe that 90-100M number from Rambus management. I think that is 128Mbit x 100M. They are conservative, and since this is clearly forward looking information with a direct bearing on the valuation of the company I don't think they would deliberately overstate this. The issue then is 1) How much revenue do they get for this? lets assume 1.5% of memory manufacturers ASP of 25$, putting the memory chip cost of a 128MByte RIMM at $200. The royalty is then $0.375 per chip giving revenue of $37.5M 2) What are their other revenue streams worth? -licences to chipset and controller manufacturers to embed Rambus controllers in their systems. one might reasonably assume an average royalty of $0.50 per device. If half the 100M devices go in PCs thats just short of 1M PCs with 8 devices each. Assuming the other 50M devices are used 2 per controller, as the playstation, then that is another 25M controllers. That gives another 26M x $0.50 or $13M - services fees. These have been running at about $10M a year and we could expect this to continue if they keep staffing levels the same. So that gives revenue of 37.5+13+10 = $50.5M or $2.24 per share. Assuming 60% flows to the bottom line, thats EPS of $1.34 Doesn't look like a value stock to me this year, but next year who can say! If it remains in fashion, and we don't have a lasting tech wreck, then it might sustain a high PE long enough to get visibility into next year. The writer holds no position in this stock now, but took 7 points earlier in the day!