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

To: gnuman who wrote (45949)	6/23/2000 11:06:00 PM
From: Don Green	Read Replies (2) \| Respond to of 93625

Rambus True Believers See Their Chip Come In By DANIELLE SESSA WSJ.COM Perseverance paid off. That was the mantra for Rambus investors, who rejoiced as word spread that it had won another victory in its efforts to force companies to pay royalty fees for its patented memory-chip technology. The deals -- with Toshiba on Monday and Hitachi on Thursday -- could set a precedent, meaning a potential revenue windfall for Rambus in royalty fees from other chipmakers. The Hitachi news sent Rambus shares soaring in after-hours trading Thursday. In regular trading Friday, Rambus shot up 18%, rising $17.5625 to $114.6875 at 4 p.m. in heavy volume on the Nasdaq Stock Market. Overjoyed Rambus enthusiasts congratulated themselves for sticking with the company through good times and bad. On Silicon Investor (www.siliconinvestor.com), one Rambus fan named "blake paterson" said: "From the bottom of my heart, thanks to the [Rambus] following ... without which I would have bailed a long time ago." Another dubbed "MR. PANAMA" was downright patriotic in his praise for the stock. Referring to its price, he wrote: "132 afterhours folks...GOD BLESS AMERICA...GOD BLESS RAMBUS... ." Hitachi, in settling a patent infringement lawsuit filed by Rambus earlier in the year, agreed to pay a one-time fee, plus royalties, to use Rambus technology. Toshiba, which hadn't been sued, also agreed to pay royalties. The deals allayed fears that Rambus wouldn't be able to land licensing fees from big chip makers for its technology for dynamic random access memory for computer chips. While Rambus doesn't produce any chips itself, it developed a technology that increases the speed memory chips inside computers. Chip makers pay a fee to Rambus to use its technology. The Hitachi settlement prompted Seth Dickson, semiconductor analyst at UBS Warburg, to raise his price target on Rambus on Friday -- for the second time this week. Mr. Dickson upped the price target to $165; just Monday he raised the target to $115 from $48 on the Toshiba news. "This validates Rambus's claim that mainstream SDRAM [synchronous dynamic random-access memory chips] implement fundamental technology covered by the company's patents," Mr. Dickson said in a research note Friday morning. Mr. Dickson also reiterated a "strong buy" on the stock. He said he expected other DRAM vendors to sign similar agreements in the near future -- significantly boosting Rambus's royalty stream. Only a small percentage of the overall DRAM market employs the exact Rambus technology, dubbed RDRAM. But Mr. Dickson said roughly 80% of the chips on the market -- such as SDRAM and double data rate (DDR) -- use technology covered by Rambus's patent. Rambus sued Hitachi in January to collect payment on non-Rambus chips. "Now you have Hitachi agreeing to settle and pay licensing and royalty fees for SDRAM and DDR," said Greg Mischou, an analyst at UBS Warburg who works with Mr. Dickson. "Rambus will owe it to licensees and shareholders to seek payment for their intellectual properties." Other vendors who could reach similar agreements with Rambus are NEC, Mitsubishi and Fujitsu, Mr. Dickson said. The double-dose of good news has caused Rambus shares to more than double since last Friday and top its old 52-week-high of $111.2656 set in March. But the stunning runup could be a serious overreaction, some observers said. Drew Peck, semiconductor analyst at SG Cowen, believes the good news has been priced into the stock -- and then some. Gary Harmon, chief financial officer at Rambus, said Friday that if royalties from Hitachi were at the low end, say 1%, Rambus would receive $10 million annually. But Mr. Peck said that even if every DRAM manufacturer agreed to pay a 1% royalty on all DRAM chips, "you do that math and you are coming up with earnings of $300 million," he said. "The question is, do you pay $13 billion or $14 billion in market cap for a company whose best case scenario is $300 million in earnings and whose future earnings will be based on the notoriously volatile DRAM price market?" Mr. Peck maintained his "neutral" rating after the deals: The stock rose too much to warrant an upgrade, he said. A fair price for the stock is $80 to $90, he said, and "even that would be expensive." That argument might not sit well with the cult-like following of Rambus investors, who couldn't be blamed for feeling dizzy after severe upswings and downturns in the stock earlier this year. Earlier this year, the shares rocketed to $118 from $22 in one month. The move was sparked by positive words from chip giant Intel., and accelerated by a so-called short squeeze, in which short-sellers were forced to cover losing positions. Short sellers borrow stock, then sell it with the intention of buying it back as a lower price. If the stock doesn't fall, short sellers are forced to cover their positions, adding to the buying frenzy. After that rally, though, the stock quickly turned south. Rambus sank nearly 70% to $38 in April as the stock got caught in the downdraft in the broader tech sector. -- Dow Jones Newswires contributed to this article.

To: gnuman who wrote (45949)	6/24/2000 12:04:00 PM
From: Dave B	Respond to of 93625

Gene, Dave B. re: <.expects to be able to get RDRAM to PC1000 by virtue of die shrinks..> I haven't seen that article, (link?) It may have been the Samsung article Thursday morning. Not sure, but it was definitely in the last couple of days. It talked about how RDRAM is done on a .23 micron process now, and as it moves onto smaller and smaller processes, it'll speed up to 866, 933, then 1Ghz. I don't know why die shrinks wouldn't speed up RDRAM the same way it speeds up everything else, but this topic is about 12 light years outside of my experience. Also, I'm not saying that PCs needs this higher speed right now or that we'll suddenly see PC1000 RDRAM -- just that higher speeds appear to be possible through die shrinks. If I find the article, I'll repost it. Dave