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

To: Chas who wrote (13883)	1/19/1999 2:57:00 PM
From: JimLeo	Read Replies (3) \| Respond to of 93625

Another reporter who doesn't really understand the RMBS story. Tuesday January 19 12:47 AM ET Rambus Stock Falls On Outlook MOUNTAIN VIEW, Calif. (Reuters) - The stock of Rambus Inc. (Nasdaq:RMBS - news), a high-flying chip company whose technology speeds the action of Nintendo game machines, dropped on Friday after the company said its near-term earnings faced a slowdown. Rambus stock dropped $8.50 to $89.50 on Nasdaq after it warned Thursday that although it had higher earnings in its most recent quarter but expects a slowdown in the year ahead. The company's cutting-edge chip technology, which accelerates the movement of signals within computers, has been put to use already to make livelier graphics for Nintendo. But Thursday it reported problems in getting personal computer chip makers to implement its technology more broadly. Because it licenses technology and software to make the high-speed chips, it depends on chipmakers to implement its products. Rambus has been viewed as a hot growth company because users want high-speed graphics -- and its stock has soared from its $12 offer price just over a year ago. But its lack of progress in the personal computer market has tied its earnings to the cycles of highly seasonal video games, sold mostly in the Christmas season. It warned that earnings this year will again be hurt by an ''expected seasonal decline in royalties from shipments'' of Nintendo 64s that use its technology in the near term, after a similar seasonal drop-off last year. Rambus said operating income rose to $2.4 million from $2.1 million, and revenue climbed 13 percent to $10.6 million for the fiscal first quarter ended Dec. 31, but it told investors to ''expect earnings in the next two or three quarters to be no better than flat'' by comparison. Morgan Stanley analyst Mark Edelstone, in a note to clients, said Rambus' long-term outlook remains on track and he expects Direct Rambus RDRAMs to ramp up into volume production in the second half of this year. Intel Corp. (Nasdaq:INTC - news), Compaq Computer Corp. (NYSE:CPQ - news) and Dell Computer Corp. (Nasdaq:DELL - news) are a few of the computer industry giants planning to make or use Rambus' Direct RDRAM technology, which could generate hefty royalty revenues for Rambus. In its move to the personal computer market it is encountering unexpected delays. It cited the discontinuation of development of Rambus-based controllers for PC multimedia applications by Cirrus Logic and ATI Technologies Chromatic Research, a key development effort. Instead of an anticipated lift to earnings this year, the personal computer segment will consume ''additional expenses over the next few quarters'' as it tries to move upstream into the PC main memory market. Edelstone, who remains bullish on the stock for the longer term, lowered his fiscal 1999 earnings estimate to 33 cents a share from 40 cents, to account better for initial timing of the Direct Rambus ramp-up. Earlier in the week, Morgan Stanley cut its rating on the stock to neutral from outperform.