Thursday, December 01, 2005

Misunderstood Rambus is (updated)

The Motley Fool reports "So far, Rambus has been awarded $645 million since it filed suit in August 2000 . . . " I admit to nodding off from time to time, but how did I miss that?

Well, it didn't happen - unless Rambus convinced the Department of Justice to forward the DRAM price-fixing fines to them. I suppose anything is possible. . .

Just another example of how little is understood about Rambus.

The Associated Press reports that Samsung, the world's largest computer-memory chip maker, has pleaded guilty to taking part in a worldwide price-fixing conspiracy that damaged competition and raised PC prices. So far, Rambus has been awarded $645 million since it filed suit in August 2000 against Samsung, Hynix (now Hyundai Electronics), Infineon Technologies (NYSE: IFX), and Micron Technology (NYSE: MU).

How big is $645 million? Rambus's annual trailing revenue totals just $154.2 million. Without interest, the company's courtroom winnings work out to about $6.45 a share in greenbacks, based on the undiluted share count. That's a lot of dough for a company trading at $17.90 per share!

Still, analysts expect revenue to increase just 4.4% next year, as earnings decline from this year's predicted $0.31 per share (the same as last year) to $0.25 per share. Those fundamentals hardly support a trailing P/E of 60.3.

The outlook doesn't get any better if the time frame is extended to five years. Analysts are looking for 10% growth annually, but the S&P 500 is expected to grow earnings 10.48% for the same period -- without the inflated earnings multiple and, in many cases, with a nice dividend.

Read the entire article linked here - or not, because it will likely vanish.


Update - 5 Dec 03

Well . . . at least two revised efforts of the The Motley Fool (TMF) were posted - then TMF article simply vanished, yes vanished. The headline remained on the list of articles. No explanation. No apology to the TMF readers or Rambus.

A bastion of credibily TMF is not. Now it is even less so.

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