Feeds

Morgan Stanley's vote for a $500 Rambus

Go, RMBS, go! Break that speed of sound

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

Staff at The Register have now had a chance to view a Morgan Stanley Dean Witter report on Rambus which it issued on the 23rd of March last and which caused shares in the memtech company to rocket on Wall Street. The report is interesting in many ways, not least because it says that its target share price for Rambus is $500 with a market capitalisation of $8.5 billion. It also appears to think that the i820 chipset, despite the trouble the whole industry has seen with it, is a solid and sound platform for Rambus' future. Taiwanese manufacturers, as we have reported previously, are not of this view. The report says: "We rate RMBS Outperform. We believe that Rambus has one of the most attractive intellectual-property (IP) franchises in the semiconductor industry and that it will become the de facto standard for PC main memory during the next three to five years." The pre-split target of $500 (RMBS splits its shares 4:1 in May/June), is based on what Morgan Stanley describes as "the average IP company" with 2.5 times growth on C2001 earnings. Further, the investment broker believes investors who can tolerate price volatility should buy into it. Why? The report says that Rambus is similar to a software company, earning high gross margins because it just licenses its technology to semi firms, but it has the benefit of extremely low sales and marketing costs. It cites the Intel Developer Forum as showing that Chipzilla (our word) delivered straightforward support for Rambus. Of course, this does not take into account the highly ambiguous statements Intel also made about Willamette's big server brother Foster at IDF. Morgan Stanley thinks Rambus RIMMs will represent 50 per cent of the memory market in 2003. And the i820 debacle, or Caminogate as we describe it? The firm believes that the i820 chipset will bring "other bandwidth enhancing technologies to the PC platform". Rambus, as we reported from IDF, and since, is cutting costs and tweaking the platform to deliver volume production, says MS. Morgan Stanley admits it's biased. The small print on the analysis is interesting, because as a matter of course Morgan Stanley & Co, Dean Witter Reynolds and/or affiliates have managed or co-managed a public offering of Rambus stocks. And, more small print adds, such firms and their employees have or could have long or short positions on these stocks. Plus, the same outfit, in the words of the report: "make a market in the securities of Rambus and Intel". One independent analyst commenting on the report, says that the rationale for the $500 forecast is likely to deliver a target price of $422, based on 2.5 times growth being equivalent to the target pe. Three year growth amounts to 130 per cent, and 2001 earnings, which should be used as the $500 is a 12 to 18 month target, gives 2.5 x 130 x $1.30, which equals $422. Rambus (ticker RMBS) closed at $332.3125 at close of trading last Friday evening. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.