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

To: Zeev Hed who wrote (45070)	6/19/2000 12:39:00 PM
From: MulhollandDrive	Read Replies (1) \| Respond to of 93625

Zeev, Have you been able to establish another position this morning?

To: Zeev Hed who wrote (45070)	6/19/2000 12:40:00 PM
From: jim kelley	Read Replies (1) \| Respond to of 93625

Zeev, Using discounted cash flow, one can get a price much higher than a $100. However, your caution is reasonable.

To: Zeev Hed who wrote (45070)	6/20/2000 5:01:00 AM
From: Bilow	Respond to of 93625

Hi Zeev Hed; Re your estimate for Rambus' royalties and stock value. I think you are way underestimating them. The thing to remember is that Rambus is charging 2% royalties on DDR, which is more than on RDRAM. (This despite their having put much more effort on RDRAM than DDR.) The next memory standard is going to be DDR, not RDRAM. You earlier stated that DDR can't get past 2GHz. There is no fundamental reason for such a figure. Speeds are only dependent on current technology, and as that technology improves, the speeds will increase. The market is going towards MCM technology, and that will eventually allow speeds in the 10s of GHz. A few years ago they were saying that SDRAM would top out at 66MHz. Now it is standard at 133MHz, point to point runs at 400MHz, with plans for 600MHz within a year. The Jazio interface will take DDR to near 4GHz, with current edge rates. When edge rates speed up in the future, those speeds will increase as well. On a MCM, Jazio will absolutely rock. So if you have a fundamental reason why DDR can't get past 2GHz, let's hear it. But back to my point. Rambus charged 2% royalties to Toshiba for DDR. All indications are that they will charge higher royalties for the late comers, presumably as much as 4%. Maybe 3% average. 3% of $100B per year comes to $3B per year. This drops to the bottom line, after taxes, call it $2B per year. At a 10x P/E, the stock trades with a $20B market cap, around 4x the current price. The interesting action will occur when the rest of the electronics industry starts spinning off their IP. I really don't think you realize the significance of the chokehold that Rambus has established on the electronics industry. Until the memory makers can design a few things out of their chips, there is no way around the Rambus patent. If the legal system supports them, they have an unbelievably valuable position. -- Carl