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

To: MulhollandDrive who wrote (13637)	1/15/1999 11:48:00 AM
From: REH	Read Replies (1) \| Respond to of 93625

Rambus Shares Fall as Much as 25% on Declining Computer-Chip Royalties Rambus Shares Fall on Revenue, Profit Warning (Update1) (Adds analysts' comments, details. Updates share price.) Mountain View, California, Jan. 15 (Bloomberg) -- Rambus Inc.'s shares fell as much as 17 percent after the designer of computer chips said earnings will be little changed for two or three quarters because of falling royalties and increased expenses. Mountain View, California-based Rambus fell 9 1/2 to 88 1/2 in late morning trading, after dropping to 81 1/4. The company's shares closed at a record 109 1/2 Monday, a ninefold surge from its initial public offering price of 12 in May 1997. Rambus, which designs and licenses high-speed technology to computer memory and microprocessor makers, said it expects royalties to drop on chips used in Nintendo 64 video-game systems. In addition, two companies discontinued development of chips based on Rambus technology just as the company began spending more to speed-up research. ''This (the stock decline) is a knee-jerk reaction to general revenues,'' said Drew Peck, an SG Cowen & Co. analyst, who rates Rambus a 'buy.'' ''The long-term story about the company is still solid,'' he said. Rambus said the Nintendo revenue decline is seasonal, caused by a lull in buying of Nintendo's game consoles after the holiday season. The company gave no immediate reason why two companies -- Cirrus Logic Inc. and Chromatic Research Inc. -- discontinued development of personal-computer multimedia applications using Rambus technology. Technology Standard Computer memory and microprocessor makers such as Intel Corp., NEC Corp., International Business Machines Corp. and Samsung Electronics, are supporting Rambus technology that speeds the exchange of information between microprocessors, the brains of a PC, and memory chips that store data. ''With each passing month, Rambus appears to be the company that will be the defacto standard chosen by Intel,'' Peck said. That optimism has sparked the ninefold surge in Rambus's shares. Mark Edelstone, a Morgan Stanley Dean Witter analyst, said he lowered his rating on Rambus to ''neutral'' on Tuesday. ''The stock was ahead of itself, but the long-term story is pretty much the same,'' he said. Rambus reported yesterday that its net income rose 32 percent to $2.06 million, or 8 cents a share, in the fiscal first quarter ended Dec. 31, from $1.56 million, or 6 cents, a year earlier. That was in line with the average estimate of five analysts surveyed by First Call Corp. Revenue rose 13 percent to $10.6 million from $9.4 million. Rambus was expected to earn 9 cents in its fiscal second quarter ending in March, 10 cents in the third quarter and 13 cents in its fourth quarter, according to First Call Corp.