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

To: SBHX who wrote (72733)	5/13/2001 5:57:46 PM
From: Bilow	Read Replies (1) \| Respond to of 93625

Hi Scared but Hopeful; Re: " Unless the existing licensees plan to stop making sdr/ddr, paying the royalties makes little economic sense for them, infineon, mu, hyundai will be able to sell the DDR chips cheaper than them." This is true in spades, but there is another possible factor. First of all, the DDR royalties are the killer, not the SDRAM royalties, and Samsung has all but halted DDR production. I believe this is due to Micron taking most of the profit out of the market, relative to RDRAM, but the 3.5% royalty may influence things. But the hidden factor in all this is the warrants / stock that Rambus has given companies in return for helping with the RDRAM ramp. My guess is that if they quit paying the royalties, even for the reason of fraud in the inducement, they also have to give back the warrants. This means that the value of Rambus' stock may have a hidden positive feedback mechanism: if the stock stays high, certain licensees won't abrogate, but if the stock drops, they will add to the bad news by halting payment. -- Carl