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

To: Armand Perez who wrote (3844)	4/18/1998 10:35:00 AM
From: Shibumi	Read Replies (2) \| Respond to of 93625

[Please forgive me if any of this is too basic and you were just being rhetorical.] >>A value reflecting P/E of on-going, earnings-producing companies in the related field, plus, perhaps, a reasonable premium for the growth expectation. This puts Rambus in the $8 - $12 category in my book at this time.<< It obviously comes down to whether you believe a valid valuation metric is PEG (Price/Earnings to Growth), and then what you project the growth to be. >>Why should I pay now for what MIGHT happen in 2+ years, especially in a highly volatile area?<< One reason might be because historically equities show major movements upward in a relatively short time period -- as the confidence of some specific earnings becomes higher, this information tends to be distributed very quickly and the price spikes. It's incredibly difficult to predict these spikes; thus, long-term investors tend to sometimes have to buy ahead of general market recognition of a higher valuation of an equity and wait on this recognition to catch on. Buying Rambus in the last few days or weeks upcoming is certainly a contrarian move given the Sync Link DRAM information coming out recently. It comes down to your bet of when the market will recognize that the consortium that wants to do Sync Link is first of all simply patching a much more serious problem (e.g., Microprocessor performance has increased roughly 60X in the last ten years while memory performance has increased at best 10X) that is getting worse -- and that like most consortiums it is an ugly, unwieldy beast. Anyway...that's just my opinion...