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

To: Alan Hume who wrote (50865)	8/23/2000 8:44:00 AM
From: Ian Anderson	Read Replies (1) \| Respond to of 93625

Alan Rambus valuation I agree your revenue figures are reasonable. What I don't agree with is the P/E you apply to them. In the long term Rambus will have growth prospects less than the industry growth rate. They get a cut of the DRAM industry's top line, which is cyclical, not growing in relation to the number of megabytes shipped, because the $/Megabyte tends to fall as fast as the Megabytes rise. Thus they should have a P/E more like a utility than a tech stock I think a P/E of 20 would be reasonable, putting the value based on your calculations at around $50 per share. I think the price may be much higher during the next 2-3 years due to the IE factor as massive growth of revenues starts. Ian