Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: SBHX who wrote (79294)	10/18/2001 6:10:45 PM
From: Bilow	Read Replies (1) \| Respond to of 93625

Hi Scared but Hopeful; Re "Realistically, the class action things are unknowns, no indication if anyone will make anything here, other than perhaps rmbs lawyers who will get more billable hours." First, Rambus carries a worse smell than any other tech stock. If getting convicted of fraud doesn't make you liable for a shareholder class action then what would it take? Second, we do have estimates of how much the class action lawyers will settle for: securities.stanford.edu Bilow, September 4, 2001 "Looking on Table 7, (page 24) there's two tables, "A" and "B". The first one is indexed by how much a company's stock drops relative to the industry, while the second is indexed by how much the stock itself dropped. I'll use the statistics from chart "B", since otherwise I'd have to figure out what industry Rambus is in. (IP Fraud, subcategory pump n dump, I suppose.) The numbers for small potential investment losses (i.e. under $1 million) gives the highest settlement / PIL at 100%. As the potential investment loss increases down the table, the S/PIL number gets smaller until it gets down to 2.56% for PILs $100 million and over. Since Rambus' PIL is $10 billion, I'll use the number for the over $100 million category. So Rambus will probably only have to pay out something around 2.56% of that $10 billion market cap drop. Whew! For a moment you were thinking that this would be big money, weren't you! Well don't you worry none! Okay, let's see... 2.56% of $10 billion is. [fingers with calculator] No! That can't be right... [fingers with calculator some more] Whoa! That's a lot of money! That's about 50% more than Rambus has in the bank! Uh oh, goodbye Rambus!" #reply-16294660 Go through the literature. Do a search for class action lawsuits and make your own estimates. It ain't pretty. The 2.5% estimate given above is the absolutely smallest that you can extract from the Stanford paper. The problem is that the tables are scaled by market cap and there is no figure for Rambus' exact market cap. I took the figures for the next larger size market cap. The next smaller size market cap had percentages of around 10% if I recall correctly. A better estimate than 2.5% would put the figure at somewhere between 2.5% and 10%. At 6%, the total payout would be $600,000,000.00 and that is more than Rambus is worth even counting the money they haven't yet collected from Intel. In essence, Rambus ran their market cap to above $10 billion by fraud. Paying the piper means paying a substantial percentage of that $10 billion. The Stanford paper linked above can be used to estimate that percentage. The resulting number is considerably larger than the amount that Rambus has in the bank. In addition to that, Rambus already owes millions to Infineon, and Infineon wasn't going for cash. In fact, Infineon offered to settle with no payout just before the trial but Rambus turned them down. By contrast, Micron is going for blood. -- Carl