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To: Ibexx who wrote (40821)	11/20/1997 6:33:00 PM
From: Ibexx	Read Replies (2) \| Respond to of 186894

Thread, SLIGHTLY OTOT: Rambus/Intel/RDRAMs Rambus surged $17 15/16 (41.7%) today on new announcements and increased EPS estimates by H&Q. The following is what R. Chaplinsky did in arriving at the new price target of $100 (up from the previous $50). Please READ AT OWN RISK at do your own interpretations. ____________ 1. Dataquest estimates that the worldwide DRAM industry will grow to approximately $67 billion in the year of 2001. At that time, DRAM demand in PCs and workstations is expected to represent approximately 70% of the total DRAM market. Therefore, Rambus' DRAM total available market (TAM) is estimated to be approximtely $47 billion in the year 2001. 2. As Intel begins to ship its next-generation chipsets based on Direct Rambus technology in 1999, Rambus's penetration into the PC DRAM market should reach 10%. We conservatively estimate that this will pump into a 49% penetration rate in the year 2001 as these next-generation chipsets become more mainstream. Therefore, we project that the market for Rambus-based DRAMs within the PC industry will represent nearly $19 billion in the year 2001. 3. Rambus currently obtains 1% to 2% royalty rate for every RDRAM shipped. Conservaively, we estimate the Rambus's RDRAM royalty revenue in the year 2001 will be 1% of $19 billion, or approximately $190 million. 4. We estimate that Rambus additionally will receive 25% royalty from royalty payments on Rambus-based logic chip sales. Therefore, we (H&Q) estimate that Rambus will achieve $234 million in total royalty revenues from RDRAMs and logic cells in the year 2001. We believe this is conservative because we are not including RDRAM royalty revenue from applications outside the PC. 5. Assuming Rambus' annual expenses will more than double from our projected CY1998 $30 million level to $75 million in the year 2001, we estimate that Rambus' net earnings after tax in 2001 will be $96 million or $3.84 EPS. 6. Using a 40x forward P/E multiple on our CY2001 EPS projection, our price target for RMBS for the year 2000 becomes $155. If we assume a 20% discount rate over the prior 2 years, our CY1998 price target moves to $100, up from our earlier price target of $50. Regards, Ibexx