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Rambus Inc. Message Board

  • tech_hound tech_hound Jul 16, 2010 3:10 PM Flag

    Hughes Business Strategy

    Blindly throw shares at Samsung and hope something good happens.

    What a Genius

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    • "Holy Shocker Batman!!"

      Did I just read a post from Drumbuss????

      I must be dreaming!!

      Please, don't anyone wake me up. I want to enjoy this while it lasts.

      LOOK OUT Best!! You've got some serious competition now....

    • So what is the proper strategy?

      Rambus tried the courts. Whyte, Kramer, Robinson, Payne, the FTC, the CA are all jokes. While Rambus will win most of the legal skirmishes, this will take years and deplete Rambus cash resources. It will continue to be a pariah in the industry. If the court system were half-way decent, Rambus would have had decisions. Justice delayed is justice denied.

      So HH went the other way. If you can't beat them in a timely fashion in court go after the biggest and most influential Cartel member and get them into the fold. Perhaps that competitive spur will get them in line. If Samsung takes Rambus tech seriously, there could be significant advantages in the settlement which now looks like a giveaway. It was a gamble. But HH had little choice. Remember, he did not make this decision alone. He had Greg Stone doing this deal with Sammie, so HH did not have fools in on this strategy. What looks cheap may be become very lucrative IF Sammie is serious. I think it will be. It wants to be a big player in the smart phone market. Rambus has the products: very high bandwidth, low power consumption, new LED technology. What is not to like? Sammie and the Cartel may have been able to get away with stealing in the past, but no more. They need new tech, new ideas and Rambus has the goods.

      What is the risk in all this? Time. The judicial system which is a complete embarrassment.
      Rambus may ultimately win but the question is when.

      I will reserve judgement until after the ITC decision. It should rule favorably and issue an exclusion order. The significant majority of controllers were manufactured by or under the auspices of Nvidia and other unlicensed manufacturers. To the extent that patent exhaustion may apply, this would be limited to components bought by Nvidia from licensed manufacturers like Samsung. However, this is relatively de minimis and patent exhaustion does not seem to help Nvidia much.

      Therefore if the ITC does the right things:
      1. No further wishy washy delays;
      2. Imposes the exclusionary order upon offending manufacturers including Nvidia----

      then Rambus will have broken the log jam. Then HH's forecast for $500 million is extremely reasonable and I might add very conservative because it is based, on the dram side, on Sammie deal rates which the rest of the Cartel would sign up for in a heart-beat.
      Therefore $300 million in DRAM revs alone is doable with upside. The upside would need to be traded for time. If the ITC rules as it should, the $200 million in controller revs is doable.

      In this scenario, $2.50 in EPS after tax(there is none due to tax loss carry forwards) is realistic and doable. This is definitely not pie in the sky. At a very conservative PE of 20, you are at least at $50. This is the Capstone target. Thus, the stock could be very undervalued.

      This is a litigation gamble. If the ITC comes thru, then Rambus has crossed the Rubicon. The extreme uncertainty is what is keeping the players off the field and bidding the price up. They all know by now that this is Rambusland.

    • For a tech hound you appear to be very green in your understanding of the high tech arena. The reason shares were part of the settlement agreement is obvious and common practice in the industry.

      Do you seriously believe Samsung wants to see $200 million in shares become worthless or would they rather they grow to be worth a billion or more - thus essentially covering the cost of Rambus patent royalties? Would this not give them a competitive advantage over their competition?

      The name of the game is making $$ and scratching each other's back is an important strategy used by all successful companies.

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