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

To: Alan Bell who wrote (13835)	1/18/1999 11:24:00 PM
From: PAinvestor	Read Replies (1) \| Respond to of 93625

Basically cost of production is significantly higher for RDRAM as chip size is much larger and a major retooling of back end equipment is required. After suffering massive losses for three years the DRAM makers are hesitating to make the leap just because Intel says so. If you wish to enquire further check some of the Micron thread posts from CarlR and myself.

To: Alan Bell who wrote (13835)	1/19/1999 1:33:00 AM
From: woodside	Read Replies (2) \| Respond to of 93625

Positive article from WSJ interactive.wsj.com January 18, 1999 Rambus Sees Flat Quarters, But Analysts Say No Big Deal By NICK WINGFIELD THE WALL STREET JOURNAL INTERACTIVE EDITION SAN FRANCISCO -- Investors seized on a cautionary earnings outlook from Rambus, driving the semiconductor maker's stock down 8.7% Friday. But Wall Street analysts were largely unphased by the news. Shares of the Mountain View, Calif., company lost 8 1/2 Friday to close at 89 1/2 on heavy volume on the Nasdaq Stock Market. Meanwhile, the Nasdaq Composite Index added 71.38, or 3.1%, to 2348.20 and Morgan Stanley's high-tech 35 index gained 37.77, or 4.1%, to 969.15. All U.S. financial markets were closed Monday in observance of the Martin Luther King Jr. holiday. Late Thursday, Rambus reported net income of $2.1 million, or eight cents a diluted share, for its fiscal first quarter ended Dec. 31, compared with $1.6 million, or six cents a share, in the year-earlier period -- matching analysts' expectations. But the company also told investors not to expect any financial marvels in the next two to three quarters, which will be "no better than flat compared to first-quarter results," it said in a statement. Rambus said growth would stall because of an expected seasonal decline in royalties from shipments of its technology for use in Nintendo 64 video games and the discontinuation of development on Rambus-based controllers for PC multimedia applications by two firms: Cirrus Logic and Chromatic Research. While some investors jumped ship at the cautionary news, analysts greeted it with a virtual yawn. "I never cared one way or another what they earned this year," said Drew Peck, an analyst at SG Cowen & Co. "It's irrelevant." The reason for Wall Street's nonchalance is familiar to long-time Rambus followers. Rambus makes a communications technology that channels data between two crucial components of personal computers -- microprocessors and memory. Without it, the next generation of microprocessors could face paralyzing performance bottlenecks trying to shuttle data to memory. What's more, Rambus's technology has received the vital endorsement of Intel, which hopes to use its dominance in the microprocessor market to make Rambus a standard ingredient in the memory chips of PCs. But most analysts believe the bounty from such business isn't expected to arrive until 2000 -- which is why most aren't too concerned about near-term profits. Intel is expected to roll out a new line of microprocessors, code-named Camino, that support Rambus's technology by this summer. But chips that use Rambus' technology won't start shipping in huge volumes till later than that. "People buying [Rambus stock] today should be buying for its hockey-stick performance," say Mr. Peck -- meaning he sees a sharp upswing in sales and profit towards the end of 2000. Mark Edelstone, an analyst at Morgan Stanley Dean Witter, concurred with that view, saying "the long term story is very much intact." For 2000, Mr. Edelstone expects earnings to hit $1 a share. Still, Mr. Edelstone pulled his horns a bit on the stock on Tuesday after it hit his price target of $110, downgrading his investment rating to "neutral" from "outperform." If analysts are less focused on Rambus's near-term earnings, there's one thing they scrutinize like jewelers searching for flaws in a diamond: the company's relationship with Intel. Any fissures between the two companies could spell doom for Rambus. Mr. Peck, for one, believes Intel's support for the smaller company appears to be "unwavering." He found a recent sign of encouragement in Rambus's quarterly filing to the Securities Exchange Commission: a nugget buried in the document said Rambus and Intel had amended their development contract to include a promise from Intel of more vocal marketing, public relations and engineering support for Rambus's technology. The support is scheduled to continue through Dec. 31, 2002, the document said. Mr. Edelstone, too, spends much of his time analyzing the Intel relationship -- and he sees no cause for worry. "This a done deal," he said. -Woodside