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

To: MileHigh who wrote (14688)	1/29/1999 8:29:00 PM
From: MileHigh	Read Replies (1) \| Respond to of 93625

From the YHOO thread... ============================= A couple of posts on the SI thread express concern over an upcoming one time charge for the stock warrants being issued to DRAM mfgs, a charge that could equal $126 million if RMBS is trading at 100 when they are exercised. IMO these warrants are typical in the high tech sector and WS generally does not place much weight on the resulting charges because they are non-cash. RMBS would issue stock instead of paying cash. The incentive provided to the DRAM mfg IMO would offset any negative image from the charge or any dilution concerns. However, if this charge concerns anyone they should also note it is a tax deductible expense. Using a 40% tax rate the $126 million non-cash charge would actually increase cash by $50 million through reducing fed and state income taxes. This issue has been to tax court at least twice, both times involving Silicon Valley hi tech companies and both times the govt lost. It should also be noted these co's were Coopers clients, who are also the auditors for RMBS (if memory serves me right) so RMBS is definately aware of this. As long as the DRAM co's are not taking an equity stake in RMBS, in other words as long as they either sale the warrants or execute them and sell the shares, RMBS should get a deduction. The warrants with Intel may be a different matter since they've been represented as an equity stake in SEC filings. Sorry if this stuff is too dry. Good luck to all longs! Overman