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

To: Don Green who wrote (16066)	2/19/1999 9:33:00 PM
From: Gary Wisdom	Read Replies (1) \| Respond to of 93625

Don, I think the one thing that we do agree on is that Rambus should have never been $110 last month. That was highly premature. IMHO, we won't see that again this year. BWDIK. However, to tank like anything has changed is just BS. Rambus has never traded on PRESENT earnings but FUTURE earnings. Everyone knows that. At $110, a correction was bound to happen. That's why I bailed earlier (and quite premature except for trading shares). However, ever notice Bill Fleckenstein on television? He is like the laughing stock of this market. Him and Barton Biggs. They have been WRONG for years now. Of course, one day they'll be right. That's inevitable. But not yet. Some exogenous event is going to have to occur for them to be right. Very possibly, an oil supply shock could do it. Or something likewise. So, why not make money on the long side while the market is in a bull phase? That's all I'm saying.

To: Don Green who wrote (16066)	2/20/1999 12:55:00 AM
From: Dave B	Read Replies (1) \| Respond to of 93625

Don, You're right on about the bankruptcies and defaults in market downturns. An old boss of mine used to say "when the tide comes in even the dead fish float". The corollary was that when the tide goes out, the dead fish get their asses hauled out to sea and are never heard from again. If/When we do crash, one of the things that will happen (and always does) is that the "dead fish" companies that have been surviving even though they haven't been managed well will tank. Bankruptcies, defaults, cats and dogs living in sin; it'll all happen. Usually, though, these are the second and third tier companies, not the market leaders. The market leaders dominate their markets for a reason. Good products, good management, good customer relations, etcetera. And potential customers, who are spending less but still spending, will turn to these market leading companies (and away from the second tier companies) because of all these reasons plus the security of knowing that they'll continue to be around. Yes, these market-leading companies will suffer (lower revenues, layoffs, etc.) but they won't get sucked out to sea. And during these market downturns the investment capital that doesn't hightail it to fixed-return instruments flows out of the dead fish companies and into these companies because they are more secure, helping to support their stock prices. So they don't tank as badly as the general market, and they recover more quickly. That was my point. In a downturn, there are companies who don't get affected as badly and who recover more quickly than the others. One thing we need to do is separate the effect of market crashes from poor management/marketing decisions. The examples you cite are more examples of companies who missed trends or made incorrect marketing decisions, I believe. Every company is capable of that in good times or bad. So I'm not sure I understand the point you're making with those examples relative to Rambus. Is it that Intel has made the wrong decision by going with Rambus and that DDR DRAM or SLDRAM will be the ultimate winner (like Sony backing the Betamax)? Or is it that by missing schedules, somehow this will all fail? I'd probably argue with both of those conclusions. But I won't argue that Rambus wasn't overpriced. Maybe it was, maybe it wasn't. Rumors of possible bad news simply reduced the demand and increased the supply so the price fell. If the rumors turn out to be false, or true with consequences not nearly as bad as was assumed, demand will increase and supply will drop. Show me a reasonable alternative to Rambus from a technology point of view, and I might even sell some of my shares. Even if the market tanks, Intel will still sell microprocessors, and those microprocessors will have to have faster memory. And Rambus is the only game in town. So maybe their royalties won't be as great, but there will still be a dramatic increase in earnings, especially relative to the other companies who would be suffering through this hypothetical downturn and who are seeing declining earnings. Rambus would still outperform the market. And that's the type of company I'm looking to invest in. I see by the hands on my Jeff Mitchell watch that it's time to hit the sack. This is a good conversation. Let's keep it going. PM me if you want, or keep it public; either's okay. Have a great weekend. Dave B p.s. Don't forget that in a downturn Rambus also has beaucoup (sp?) bucks in the bank to help smooth the waters. They wouldn't have to fold the tents for quite a while.