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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: kash johal who wrote (117232)	6/22/2000 8:36:00 PM
From: Petz	Read Replies (1) \| Respond to of 1570751

kash, re:<If the memory market is 100Bn within 5 years (WAG on my part) a 2-3% royalty is $2-3Bn. And most of that is profit. I can see a valuation on par with say qualcomm of $50-60Bn.> If we have profits rising slowly from nil to 2.5B over five years, and then declining at, say, 15% per year, the profit stream would be: PROFIT NPF@15%/year discount 0.1B 0.1B 1.5B 1.3B 1.7B 1.2B 2.0B 1.2B 2.3B 1.2B 2.5B 1.1B 2.3B 0.9B patents expire Tad LaFountain valued AMD by discounting future profits by 20% per year on the theory that AMD's earnings could "blow up" with 15% probability +5% interest rate. Even if I'm generous and discount at 15% per year, Rambus is only worth $7B. If I saw some evidence that Rambus would have future variations better than RDRAM, i.e., if they were spending 10% as much on IR&D as the entire remainder of the memory industry, thats a big, big IF... (actually an IMPOSSIBLE IF) then I could see valuing an earnings stream beyond 2005. $7B valuation is about $73 a share. Petz