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

To: capt rocky who wrote (14861)	2/1/1999 4:01:00 PM
From: REH	Read Replies (1) \| Respond to of 93625

Fred Hager posted this on Yahoo: My Rambus price target for January 2000 is $200. My Rambus price target for January 2001 is $400. Here is the latest important news. Samsung the worlds second largest manufacturer of DRAMS in a press release dated Jan.17, 1999 stated it will produce about 500,000 Rambus chips monthly in the first half of 1999 and about 5,000,000 Rambus chips monthly in the second half. The Korean memory giant predicts that Rambus DRAMS will be used in about 30% of all new PCs in 1999, representing a $2.6 billion market for Rambus chips. According to Samsung in the year 2000 the market for Rambus DRAMs will grow to $13.5 billion. Samsung also predicted that over half of all memory chips would be based on Rambus architecture in the early part of the next century. In a conversation I had with Subodh Toprani Vice President and General Manager of Rambus's Logic Division, he told me that the chips other than memory chips are a potential for Rambus applications which exceeds that of memory chips by several hundred per cent. Mr. Toprani's division is only concerned with non-memory applications. The potential is absolutely enormous and will, by the year 2005 exceed $100,000,000,000.00. By the way that is 100 billion. In addition to Samsung, the world's largest manufacturer of DRAMS, Micron Technology is busy ramping up for the production of Rambus chips. Just a couple of months ago Intel invested 500 million dollars in Micron so that they can afford to ramp up on a large scale. There must be a lot of investors that are aware of the huge potential for Micron if it can scale up the manufacturing capacity for Rambus chips enough to meet the exploding demand next year. Micron's stock has doubled in the last two months. Last Friday was the Rambus annual stockholder meeting. There was not much news. Management stated that their attorneys had cautioned them about making forward looking public statements. Questions came up about competition of DDRDRAM and SLDRAM. The President of Rambus personally took the question saying while the newest Rambus RDRAM has been shown running in systems to manufacturers, to his knowledge there has been no DDR or SLDRAM demonstrated running in a system. There is no contest in speed since the Rambus RDRAM runs more than twice as fast. The bottom line, how do I get to $400 per share in two years? First I take the latest Samsung projection for Rambus chip sales for the year 2000. (Who else could have a better handle on the ram market?) The projections assume calendar years not Rambus fiscal years, because the Samsung chip projection covers calendar periods. Rambus chip sales = 13.5 billion Royalty 1.5% = 203 Million Adm. & R&D 25% = 50 Million Before Taxes = 153 Million Taxes 37% = 56 Million Net Profit = 97 Million Per Share 25 Million shrs = $3.88 P/E 100 = $388 P/E 130 = $504 P/E 250 = Now If Rambus made a profit of $3.88 a share in the year 2000, The P/E would in my opinion exceed 100. I expect Rambus shares to exceed $1000 by 2005 before adjusting for splits. To be a successful investor you need patience and guts. Fred Hager fredhager.com