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

To: The Prophet who wrote (47171)	7/13/2000 9:07:56 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 93625

Prophet, you must differentiate between stock prices and shipments, I do not expect to see a YOY reduction in unit shipments of chips for quite some time, but pricing will deteriorate and as a result profits, stock of chips will peak long before that is actually happening and stocks of chip Cap equip. before the chips and much more severely. As they used to sasy, when the chip industry catches a cold, the chip equip sector catches pneumonia. A cold in this case is slowdown in growth rate. But as I said, right now, into earning season, the chip sector will do relatively well, even if RMBS may attempt to close the second gap (it almost closed the first from $97 to about $75). If you look at RMBS' chart it is in danger of forming a massive double top formation, you got to watch this one or be doomed to see paper profits evaporate. Zeev

To: The Prophet who wrote (47171)	7/13/2000 9:08:26 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 93625

Prophet, you must differentiate between stock prices and shipments, I do not expect to see a YOY reduction in unit shipments of chips for quite some time, but pricing will deteriorate and as a result profits, stock of chips will peak long before that is actually happening and stocks of chip Cap equip. before the chips and much more severely. As they used to say, when the chip industry catches a cold, the chip equip sector catches pneumonia. A cold in this case is slowdown in growth rate. But as I said, right now, into earning season, the chip sector will do relatively well, even if RMBS may attempt to close the second gap (it almost closed the first from $97 to about $75). If you look at RMBS' chart it is in danger of forming a massive double top formation, you got to watch this one or be doomed to see paper profits evaporate. Zeev

To: The Prophet who wrote (47171)	7/13/2000 1:08:01 PM
From: Richard Habib	Read Replies (2) \| Respond to of 93625

My Semico numbers indicate that 1995 was a peak at about $40B for the DRAM market thereafter falling to $13.9B in 1998 at the low. Semico forecast late last year $40.2B in 2002. Adam Schwebel (whoever he is)indicated a figure of $76B. It's reasonable to assume that the peak of this cycle will result in a somewhat larger $ value than the last peak due to the larger number of units shipped. $55B might be a reasonable number to use for 2002. The question is if this will be the peak as this will be about the time new capacity starts coming on line. It seems to me that the critical issue will be how well new supply is correlated to demand. That in turn may be influenced by the technology to better forecast demand/supply issues. 2002 may well represent a peak but one would think the decline will be less than the 65% collapse of the previous cycle that was also influenced by the Asian crisis. The awkward thing for RMBS long term is that it will just be establishing itself as the market leader when the DRAM decline likely sets in. The other issue is, as I've noted before, that the market is discounted much further into the future than previously. If one assumes $55B and RMBS has 75% roy at 1.5% with 97.5% GM and normal tax rate one gets about $4.50 earnings per share. (Includes some chip to chip interface rev that according to Tate will be coming on line at that time.) At share price of 100 that yields a PE of about 22 just as the DRAM cycle contracts. So RMBS may be near fully valued thru the peak of this cycle. Rich