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

To: Andrew Shih who wrote (2438)	11/22/1997 3:38:00 AM
From: DAY TRADER	Read Replies (2) \| Respond to of 93625

AGREED THE P/E IS ASTRONOMICAL AND THE STOCK IS OVERBOUGHT RAMBUS HAS TAKEN TWO MAJOR DIVES THIS YEAR ALREADY. AND IS POISED FOR ANOTHER SOON. THE SHORTS WILL MAKE MONEY ON THIS ONE VERY SOON. DT

To: Andrew Shih who wrote (2438)	11/24/1997 11:34:00 AM
From: Warren Gates	Respond to of 93625

From H&Q << 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. >> 1. Funny how they do all their estimate for year 2001, then projects a price of $155 based on this for year 2000. So once $155 in Y2000 is reached, expect $0 gain for 1 year. Is this part of the Y2K problem? 2. Then they expect $100 by next year, then a $55 gain for the next 2 years which roughly translates to a 25% annual gain from 1998 to 2000. So does this mean they're expecting a PE of 20 to 30 from 1998 to 2000 then a PE of 40 afterwards. All this after a PE of 700 in 1997 !!! 3. Those guys attended too many Algebra classes, they forgot the Art class. If they did, they would have learned to draw a nice curve from .08 (1997 EPS) to 3.84 (2001 EPS). If they did, they probably would have guestimated an 80% gain from 1999 to 2000 on a price of $86, a 120% gain from 1998 to 1999 on a price of $39 and a 160% gain from 1997 to 1998 on a price of 15. This gives a PE of 187 for 1997. Does this look more realistic? Yes, only trouble is, stock is way ahead of itself right now.