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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Seldom_Blue who wrote (34031)	10/29/2000 11:08:30 PM
From: tinkershaw	Respond to of 54805

Is a gorilla in a low growth industry still a good investment? In RMBS' case the answer is yes. Even if the industries growth slowed significantly Rambus' technology is essentially disruptive. RDRAM will replace other DRAM if successful going from 0 to billions of $ in short order if successful. If RMBS successfully defends its patent position regarding SDRAM, DDR, and RDRAM, it is similiarly disruptive going from $0 to billions $ in short order. The enormous size of the industry combined with Rambus' disruptive ability to instantly collect royalties on the entire shebang pretty much immunizes Rambus in the short to medium term from any industry slow down. Long-term of course, after Rambus has managed to collect royalties from 100% of the industry this will be an issue. 30% a year is good but nor horrific growth. But DRAM is RMBS' first market. Mark Edelstone has stated that he expects RMBS to next go after the controllers. Royalties on these are in the 3-5% range and according to Edelstone will actually bring in more royalties than will DRAMs. Rambus is also developing product for the communication chip industry. Everything from routers to fiber (gosh darn memory...doing too much study of logistic regression for segmentation analysis here {yeah its pretty cool stuff if you get beyond the name}) ahhh yes, to fiber channel. According to Rambus management the communication market will eventually be a larger royalty stream than the DRAM market. Rambus technology is described as applicable to any chip to chip communication, not just DRAM to processor. Thus the potential to be a gorilla in many large and growing fields exists. DRAM is not the end-all for RMBS. If RMBS is able to control DRAM it almost certainly will control the required controllers. Rambus will have to do a little more work to get established into the communication chip industry. But one should not steer away from RMBS due to fears of a computer slowdown. There are plenty of other valid reasons to steer away from Rambus;) Tinker