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

To: jim kelley who wrote (44803)	6/17/2000 1:11:00 PM
From: Don Green	Respond to of 93625

Toshiba boost for Rambus Electronics giant to pay royalties on memory chips BY THERESE POLETTI Mercury News Japanese electronics giant Toshiba Corp. has agreed to pay royalties to Rambus Inc. on almost every memory chip it makes -- an endorsement that could help the small memory chip design firm extract similar payments from other chip makers and dramatically increase its revenues. News of the deal, announced late Thursday night, sent Rambus' stock soaring 45 percent Friday, as investors speculated that the company could take in as much as $200 million a year in royalties if other chip makers follow Toshiba's lead. Shares of Mountain View-based Rambus jumped $25.44 to $82.13 Friday, as more than 64.1 million shares changed hands. ``Toshiba sets a dangerous precedent for the rest of the industry,'' said Drew Peck, an analyst with SG Cowen & Co. ``Obviously this company believes it infringes on Rambus' intellectual property. It's a big deal. The crux of the debate has now shifted from whether or not Rambus memory will dominate to whether Rambus can collect royalties on virtually every memory chip.'' Rambus designs interfaces that speed up communications between memory chips, the microprocessor and other chips in a personal computer. Since the company doesn't manufacture its own products, its revenues are all based on royalty streams that it derives from companies which license its designs. Rambus is best known for its next-generation memory technology, which offers a very high-speed interface. Many chip companies have agreed to license that design and pay royalties to Rambus, although manufacturing problems and the high cost of the Rambus-type memory have limited sales so far. However, Rambus also claims that it has patents on technology used with most memory chips currently sold, particularly a type of chip called synchronous dynamic random access memory (SDRAM). Deal is struck Toshiba essentially agreed with Rambus' position and struck a deal to pay Rambus royalties on Rambus' patents on memory high-speed interfaces used in SDRAM and in double data rate (DDR) memory chips. (Toshiba had already agreed to pay royalties on Rambus' next-generation memory designs, known as RDRAM.) Rambus executives told analysts on a conference call that the royalties that Toshiba will pay could reach about one percent of Toshiba's $1 billion of memory chip products, or about $10 million a year. Toshiba will also pay Rambus an undisclosed up-front royalty payment. But the royalties won't stop with Toshiba alone. The company also said that it is in talks with other memory chip and logic chip companies. ``Our patents are pretty fundamental and we think all manufacturers should be studying them,'' Geoff Tate, Rambus' chief executive, told analysts Friday. ``We will be studying their parts.'' Tate noted that this new royalty stream is more of a short-term boost and that the royalties from its core RDRAM designs will dominate in the future. ``The short-term impact is large because SDRAM is the largest single-selling (memory chip) product,'' Tate said. Analysts said that, based on the Toshiba model, Rambus could generate about $200 million in annual revenues, taking a one percent royalty on the $20 billion of memory chips sold annually. Rambus' revenues were only $43 million last fiscal year. Rambus has been a controversial player in the memory chip industry, where most companies typically cross-license each other's designs and shun paying royalties. Patents suit The company is already involved in a messy lawsuit with Hitachi Ltd. over the same patents, in which Hitachi is alleging that Rambus made changes to its own patents after participating in industry trade association meetings where memory technology was discussed in an open forum. ``This is a huge industry issue,'' said Janet Ramkissoon, a fund manager at Quadra Capital Inc. in New York. ``I am waiting with bated breath to see how the industry reacts. . . It really does amount to a tax on the whole memory business, and since memory devices are used in such a large cross-section of products in technology, it really is equivalent to a tax on technology.'' A spokeswoman for Micron Technology Inc., a major memory chip maker based in Boise, Idaho, declined to comment on Rambus' agreement with Toshiba. Hitachi and other memory chip companies could not be immediately reached for comment. But some analysts predicted that most companies will not be easily persuaded to enter into a royalty pact. ``A lot of the remaining DRAM players have a very strong dislike of royalties and would be very unlikely to enter into the same kind of arrangement as Toshiba,'' said Nathan Brookwood, principal analyst at Insight64, a consulting firm in Saratoga. ``Micron and Hitachi may be the two who are the most vociferous on that, but others are not far behind.'' Contact Therese Poletti tpoletti@sjmercury.com or at (408) 271-3718.

To: jim kelley who wrote (44803)	6/17/2000 1:12:00 PM
From: Scumbria	Read Replies (1) \| Respond to of 93625

Jim, So my lack of interest is due to the poverty of the debate. Your lack of interest appears to be due to your huge financial stake in RMBS stock. You don't appear in the least interested in the technical arguments. The events of yesterday had nothing to do with the technical merits of DRDRAM or DDR. They did make us a lot of money however. If Rambus expects higher royalties from DDR than DRDRAM, why would they continue to push DRDRAM? The Toshiba deal is very wierd, but certainly does not bode well for DRDRAM technology. Scumbria