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To say the price move was caused by the stock price being over-extended is ridiculous
I don't think that statement is ridiculous, but I do think it's only part of the picture - which you allude to. The stock had enjoyed a spectacular run-up based mostly on retail speculators. These same speculators and other nervous nellies had stop losses in place (I'll never understand why people bother to use stop losses on this stock) and the tension on Thursday was palpable. As Tim suggested, someone with brains and significant resources took advantage of the tension. It could have been a hedge fund or it could have been someone else. D.E. Shaw has a large position in Rambus - they could have seen that the Bus was ripe for picking so they could have started selling their longs or even shorted against the box. It wouldn't take much (as evidenced) to get that ball rolling - short or sell a million shares and buy or cover those same million shares minutes later 15 bucks lower for a 15 million profit in less than 10 minutes. Bravo to whoever pulled this off.
I was away from the wheel when all the action was taking place which is probably a good thing. I might have done something dumb. As it was, the jury cost me the premium on my April long puts. This was some protection for me - bought the 35s so as not to pay too much premium, but it ended up being flushed. Now I'm left with a few shares unhedged and the rest covered by written calls. The premium was too high not to sell into. I sold some with strikes of 50 and some with strikes of 60. I don't see the stock going much higher than that so I should enjoy most of the upside. I'm hoping my calls get assigned after that.
On another note - been thinking about Danforth's automatic option sales and whether it actually says anything about his faith, or lack thereof, in Rambus. I've decided it doesn't speak to his confidence in Rambus but rather speaks to his confidence in the Rambus' compensation committee. Danforth knows that they'll grant him more should he sell/exercise all the ones he has. These guys have no skin in the game. Apparently money does grow on trees - the Rambus variety. Saw someone on another board pronounce that the option exercises were a good thing because they put cash back in the coffers to the tune of 43 million or so. Unfortunately, this investor isn't looking at the fact that 3.8 million options were exercised and if Rambus wants to avoid diluting the pool, they need to replenish the shares. 3.8 million * 38 is a 144 million. So Rambus has sold the stock low and will buy high to replenish.
Good luck to everyone this week.
GoshDarn Money Grubbers...
$8.4 million of the increase in expenses was due to the recognition of FAS 123® stock-based compensation in the first quarter of 2006. The Company also incurred approximately $1.6 million of employer payroll tax expense as the result of exercises of 3.8 million options in the first quarter.
Our wonderful mgmt cost us 10 MILLION in one QUARTER!!!
GRAVY TRAIN!!! CHOO CHOO!!
And the fact he makes numerous references to findings from the "Samsung Case" in his Alberta Memorandum is noteworthy.
The transfer is good news - quite clear to me. I think the reason Bobby references Samsung so much in his order is that Payne is trying to justify why he kept the Samsung case to begin with. I think Honest Bob is sensing the change in the wind and is trying to support his initial ill-advised decision to keep the Samsung case.
This leaves only Samsung in front of Payne (Micron and Alberta are out). I can imagine Payne wants to be done. Payne is allowing the Hynix trial information in - maybe - just maybe - it will give him the reason to finally be done with the Rambus saga.
This is very interesting - I'd love to see something come of it!
Just Spoke to Jerry Brady's (for Idaho)
by: boycottallnonliscenses 04/12/06 12:46 pm
Msg: 950108 of 950190
office....This man is running against Otter and is more than interested in the documented facts surrounding Congressman Otter and his role with the FTC, the letter to the DOJ, his relationship with the Simplots, and his investments in Micron..
Someone whom can e-mail all the documents including the letter from voluntarytrade.org can send this to:
jerrybradyforidaho.org
208-424-8800-Phone
AND THE FOLLOW-UPS
*****
Re: Just Spoke to Jerry Brady's (for Ida
by: boycottallnonliscenses 04/12/06 12:53 pm
Msg: 950126 of 950192
I got all the documents and will be forwarding on to him....Politicians will use anything to favor their honesty and ethics and destroy the apponents...This is juicy stuff for him to use..
Will let you know what comes of it
*****
Re: Just Spoke to Jerry Brady's (for Ida
by: boycottallnonliscenses 04/12/06 01:04 pm
Msg: 950140 of 950194
It's done..They said it was earthshattering..I lead them through all the voluntarytrade documents and they were shocked that he would protect 237,000 in investment money to defraud the entire country through these JRA efforts and his personal role in abuse of power
Thanks for all the feedback - you stick your neck out there, you never know if people will decide to cut it off. I think a lot of valid points were made to rebut my thinking, and I can honestly say I'm hoping the bus goes to 107 as well. The good news is that we shall know soon enough.
Happy trading!
And, even using your $60 price objective, why the admonishment, "Buyer beware?" If you built infringement and AT wins into your calculations, where is the downside risk from today's $42 price? Buyers today will make money, right?
I guess I'm saying I see 60 as a best-case scenario. "Buyer beware" because the upside is not as much as many are saying and no one is talking about the downside. Interestingly enough TJ, you have one of the lowest odds for a "win" in Cal's poll, and I don't think anyone would accuse you of being a pessimist. I think you are acknowledging that litigation carries much uncertainty. There are a number of people who note that there could be a lot of volatility to the downside next week but no one thinks that very probable.
I would suggest that there is a fair amount of expectation baked into the current price. A judgment of 200 million or less WILL disappoint and the stock WILL go down. So you have a scenario where Rambus can be seen to have effectively won the trial but lost the war. Buyer beware that even a verdict of infringement that carries damages could trigger a sell off in Rambus shares.
Cheers!
The following is the kind of baseless analysis that worries me and has me pulling out my contrarian hat.
by: croaker_frog 04/08/06 10:01 am
Msg: 946580 of 946775
I've been here for all the legal decisions; and a few points are lost without looking at this in perspective. First, to have a jury uphold key patents that have been stolen for ten, fifteen years is, lets say, worth at least the run-up to 42. Second, if you factor in the funds that cannot or will not invest with such important legal uncertainly hanging over the company's head, then I think you are talking at least +10.
Third, the recovery of some legal fees alone should be worth at least +5. Fourth, the legal notice a win places on those who have yet purchased a license should be worth another +15 (outrageously low, but offered for argument sake) Fifth, I think it reasonable to assume that Sammy will come around after seeing the verdict on damages, and begin talking business again that should be worth another +10 (outrageously low again in all probablility).
Sixth, the AT suit is about as close to a slam dunk as human nature and behavior would expect, and that should be worth, as a guess, at least a pop +20. (outrageously low perhaps.)
Seventh, the FTC should drop the case soon and go after the real crooks, and I only see a pop of a buck or two for that so I won't even add that in.
Eighth, Future licenses for all the new stuff, new product, I'll just throw in for the short term of the next year or so +5.
Now, add this up from 42. What do you get?
107. 107. 107. 107.
To me this 107 is conservative, possible within months, not years, and is attainable with just this ONE favorable ruling, yet there are many more on the way.
I would be very happy to see 107, and likely a whole lot more.
All is just my danm opinion based on being here a very long time.
When does the party start at Scruffy's? The ol'croak may make a "guest" appearance. LOL
best wishes, croaker
________________________________
Not to pick on Croaker, but I think his "analysis" is emblematic of the current LTL sentiment. There seems to be a desire to avoid number crunching and instead focus on qualitative ways to guestimate where the stock might go. It makes no sense to evaluate potential impact on Rambus for various scenarios by adjusting the price per share. It would at least be a little refreshing to see someone say that if Rambus wins against Hynix and collect 300 million then I would expect the stock to increase by 450 mill in mv or about 4 bucks a share. At least that would make sense. To say that you expect a 20 pop from the AT suit is not credibile. That's one problem I have - irrational projections.
Related to this problem is: who are the next round of buyers? Institutions? Institutions are a lot better at keeping irrational expectations out of their formulas for determining valuation - look at Hambrecht and BWS. Retail investors are fully stocked and the big money will apply reasonable metrics before they buy in.
Another related problem is expectations. Expectations from various polls I've seen seem to put damages from the Hynix trial at north of 300 million. Does that mean 300 million is baked in? Will there be a sell-off if damages are lower than that? Are LTLs planning to cash out after the news - buy on the rumor, sell on the news???
Let's dream for a moment and assume that Rambus is able to collect 2 billion in past damages between the AT suit and the infringement suits against Hynie, Sammie, and Mickey. I could be wrong, but I would think that even a LTL would find that to be a decent payday. Now Cal has noted that valuing that payday at cost is perhaps a little too simplistic so let's be generous and value it at 1.5 cost or 3 billion in MV which is less than 30 a share. This brings us back to valuing the core operations of the company. Let's assume Rambus is able to "convince" Samsung, Micron, and Hynix to pay 3.5% on all DRAM sold (it won't be 10% despite what people might think) - those three companies represent 65% of DRAM sold so I get about 570 mill in revenue per year. I throw in another 230 mill in revenue per year from other sources which I consider generous given that Intel still hasn't resigned and without them, other revenue is probably a lot closer to 100 mill than 230. So we can expect 800 mill in revenue and we can value Rambus at 8x sales (just like IDCC and ARMHY) and come up with 6.4 billion in additional market cap. However, my guess is it takes Rambus at LEAST another 3 years to collect that level of revenue (via injunctions and exhausted appeals) so I would apply a discount on that of 25% a year for three years given there is a huge amount of uncertainty in litigation. THEN remember that Rambus patents do expire and given that Rambus (in this hypothetical scenario) has extracted billion for the MMs, the Rambus revenue would be cut by 2/3 and then what? Ignoring that and applying the 25% discount as above, I get impact from revenue of 3.3 billion or about 30 bucks a share. Add that to our 30 in valuation from cash and we get 60 a share under VERY generous assumptions.
Buyer Beware.
And the change in price is what you believe is the most likely event if the stock price moves up or down. That may or may not coincide with a weighted average. No problem if you want to hang on to win: 72% up 5.5, Loss down 2.9.
Ok - rethinking what you are looking for -
If it moves up (win) +6 bucks a share
If it moves down (loss) -10 bucks a share
Odds - 72% chance it moves up. How's that for rational skepticism (as opposed to irrational exuberance)?
A poll from TMF, FWIW
What do you expect to be the final damages awarded to Rambus in the trial vs. Hynix?
8% (5 Votes)
Less than 100 million
20% (13 Votes)
100-200 million
28% (18 Votes)
200-300 million
34% (22 Votes)
300-500 million
9% (6 Votes)
more than 500 million
Cal - first a definition:
Win - Rambus is awarded some damages - odds 90%. Loss - no damages and the stock goes down 20 a share. However, there are degrees of losses and degrees of wins - having trouble doing the black and white thing. There are really two pieces - how many and which claims are infringed and what are the damages. I would argue that the latter is of utmost importance because it sets a precedent whether people like that or not. If a jury finds 8 claims are only worth 100 million for five years of infringement, Rambus has a big problem.
Let's say damages are less than 100 million - I say the stock goes down 10 - I give that a 20% chance.
Damages are between 100-200 - I give that a 50% chance and I say the stock rallies 5 bucks and then fizzles.
Damages are more than 200 million 30% chance and the stock rallies 10 bucks and may hold.
If I've done my math correctly, my weighted average guess for a win is 72% (80% stock goes up with a damage award and 90% odds of any damage award) and my prediction is the stock goes up 5.5.
Now we have a 10% chance the stock goes down 20 and a 18% chance (.2 * .9) the stock goes down 5 so I'd guess a 28% chance the stock goes down 2.9.
So Win 72% up 5.5 Loss down 2.9 - not very thrilling.
When you start thinking about writing laws that differentiate one from the other, I have a great deal of anxiety that what is going to come out is not going to be something you’d want to show small children. But I can smell it going on.
That's some nose Harry's got. I wonder if he can hear it as well - an ear to the floor? I like to read between the lines and if there is actually anything there, it looks like Hughes is seeing the same possibilities that I am - that this thing DRAGS on for at least two more years by which point the Rambus patents approach their twilight. Call me chicken little!
On the positive side, I see a "semi-win" with average damages on DDR/SDRAM claims that is not going to bump more than 5 points, IMO. A more limited win with small damages and only a few SDRAM claims puts us down 10 IMO because I think the market is looking for more, and something extendable to other litigations.
Hmmm - I'll share that wet blanket with Nic. There's a good reason that Hambrecth, who has a buy on this stock, only has a 38 target and it's the same reason that BWS is now downgrading - Valuation! Hambrecht is forecasting near a billion bucks in settlements and only has a 38 target on it. If the award is low (less than 200 mill), the stock will rise temporarily and then drop and stagnate (just like IDCC when it won 200 mill against Nokia). Hynix will appeal and continue to fight - what's a 200 mill bond to them - not much. Micron and Sammie will also continue to fight and keep using the FTC to dog Rambus. I think it takes an award of 400 mill or more to get this stock to 50. An award between 200 and 400 - maybe high 40s.
My odds - Rambus win (i.e. infringement on 5 or more claims) 80%. Damages of more than 250 million - 20% chance. Therefore, I see an opportunity to sell this stock at 45 and then watch it fizzle to 35.
NukeJohn never did take me up on my bet of 10,000 bucks. His position was a settlement with Sammie puts Rambus over 75. I say, I'll take his 10 grand and pay for one semester of community college for one of the kiddies. :>
Many thanks LOLo!
What kind of handle is multicollinearity? Why not something like heteroscedasticity?
Thinking about sadistics (I mean statistics) makes my head hurt.
Thanks again Biker for the updates on the Bus!
JJ Lee, the last witness who is a Hynix DRAM EE verified Murphy’s position.
Cal - thanks so much for the report - not sure anyone else could provide the color you do on such a technical topic.
One thing - what did you mean by your comment above - that this guy affirmed everything Murphy had stated?
Kent - I happen to agree with you. Cal stated in his report that only an EE would find yesterday's testimony from Murhpy interesting. The average person will tune it out. But everyone loves drama and that's what these jurists will focus on. I think it very hard to win on the merits in a very technical case like this - it's too boring and high level for the jury. Hynix is going to focus less on claiming that they don't infringe and more on creating drama and obfuscating and that is what the jury will focus on. I fear Stone would be better off painting Hynix as an evil Korean company and repeatedly yelling that "they stole from us!"
And the average Joe DOES resent people who have made a lot of money - especially when they feel it wasn't earned. Don't anyone forget what happened in Virginia - it's a different judge but the tactics are the same for Rambus' opposition - make this an emotional plea and distract the jury from the facts.
Personally, I expect a settlement after the completion of the trial and before the jury returns a verdict but for far less than what people are hoping.
Thanks Cal - I appreciate waking up to find today's edition of the Free Press at my fingertips!
Interesting quote from the Hynix transcript as shared by Blackbote on TMF...
Quote from the transcript:
The damages that Hynix is responsible for - they're a joint conspirator, they're libel (sic)
for joint and several liability for all the royalties that these companies didn't pay.
Now, I couldn't make that argument before today because I couldn't put in the evidence of their conspiracy.
But now I can and I intend to argue that the royalties that micron should have agreed to pay and didn't, the royalties that
Infineon didn't pay, The royalties of the companies that Mr Furniss listed, they are all royalties that Hynix should pay because
it's their conspiracy that caused all this to happen. And they are jointly and severally liable for those damages.
The licensing and other fees payable by Fujitsu over the term of the Agreement can range between approximately $108 million and $198 million. Fujitsu’s payment amounts will be based in part on the relative volume of DRAM that Fujitsu purchases from Rambus-licensed or unlicensed memory manufacturers.
Wonder what the term of the agreement is? I like to see them bombard us with incrementally positive news (IBM and now Fujitsu) - perhaps this will be extra rocket fuel for the launch.
Jeffrey and Cal - thanks in advance for whatever information you will be able to extract from San Jose!!
An important request in case anyone missed it...
Hayes Stagner is my partner and he is attending the Rambus trial.
Stuart Steele
Hayes Stagner says: To All Rambus Investors:
I am a Rambus long who has been involved since 1999. I have attended a number of court proceedings in Virginia, Delaware, California and Washington, DC.
At the very start of this JURY trial, John Danforth, in his usual polite manner, asked that all Rambus investors be fastidious in not talking about the case, in any way, at any time, in or around the court. A few investors (AND YOU KNOW WHO YOU ARE) have chosen to ignore not only Mr. Danforth's request, but several mentions by myself and others also in attendance.
At the close of Thursday's proceedings, Mr. Furniss, who represents Hynix, rose to tell Judge Whyte that “some members of the public” (Rambus investors are essentially the only ones there except lawyers, members of the press and analysts) had been overheard by Hynix lawyers talking about the case in the presence of Jurors. He asked that it be taken note of that this could be a very problematic situation that could cost both sides a great deal of money if the trial is tainted in any way. Our Mr. Stone chimed in fully supporting what Mr. Furniss said. Judge Whyte then said a few words himself about the importance of respecting the legal process.
I cannot fully describe, without using multiple expletives which might offend our more gentile readers how angry and embarrassed I am that we Rambus investors were admonished for our conduct in and around the court in San Jose. It is ESPECIALLY outrageous that it had to come from any SOB representing Hynix.
Let me share a few thoughts with some Rambus investors (AND YOU KNOW WHO YOU ARE).
1. This trial is about Judge Whyte, the jury and Rambus. IT'S NOT ABOUT YOU!
2. A repeat of this irresponsible behavior might even result in our being excluded from the court room.
3. We didn't come to this trial to listen to you. We came to listen and understand these critical proceedings.
4. There are many millions of dollars at stake for Rambus and therefore for us, the investors. Anything that might prejudice us or impede Mr. Stones work is outrageous.
5. After all we have been through; we should feel privileged to be before a brilliant, fair and honest judge. It is an insult to this fine and decent man not to respect his requests and to honor his court by acting in any way that would interfere with him perusing a just end to this trial.
I personally have a great deal of money invested in this company and some have a great deal more.
I ask all of you to support me in demanding that certain Rambus investors (AND YOU KNOW WHO YOU ARE) either refrain from discussing the case in or around the court or get the hell out and go home.
Thank you.
Hayes Stagner
Stone called them on it and this COULD be very, very good for Rambus. To be fair, it could also be bad for Rambus.
Something that could either be very very good or could be bad. That's as cryptic as it gets. Mark mentions cheating - sounds like a JEDEC reference was made. Perhaps Hynix is attempting to create a mistrial to create further delay...
TJ - I agree with you on Payne - the guy still hates Rambus - he seems to have made the sole purpose of his existence to burn Rambus.
Wow, what about
those Mar 35 calls? T- 6 trading days!
How about T-1 trading days - options usually expire on the third friday of the month.
There is a major FUD campaign underway now as the trial begins in earnest.
Does this include me? I've never been part of a FUD campaign before. Mr. J M Kel - do you really believe that damages could approach 1 billion in the Hynix trial alone? I sincerely hope you're right although the skeptic/cynic in me doesn't believe you. I would remind people that Samsung is only on the hook for 1 year of past damages.
Mark and Doc - I can't thank you guys enough - you've both spent many hours and perform an invaluable service for everyone on all boards!
Per year, from when Hynix was notified that they infringed. (1999 or 2000 I believe). So approximately 6 years.
Nowhere does it say per year - this is cumulative since 2005 - US sales - which are the only sales Teece is permitted to discuss. And Nic is right - need to remember that a good portion of these sales are SD - I think 1/3 SD and 2/3 DD is more accurate.
So I come up with 112 million in past damages assuming .75 for SD and 3.5 for DD and maybe Rambus gets lucky and the jury TRIPLES that figure - they get 330 ish - that's not bad but what is the precedent for tripling an award given no willful infringement?
You can talk about injunctions (which are almost always stayed) but if the award is less than 200 million, I'm not sure Hynix will think it's a big deal to post a bond for that and fight this for another 2 years.
TJ made the point that it wouldn't make sense for the jury to award less to Rambus than they would have received had Hynix signed at the rates they wanted to begin with. Those rates are 0.5% for SD and 2% for DD. Based on those rates and assuming the 4.4 billion represents only 1/3 of Hynix worldwide sales, Rambus could have expected to receive about 196 mill had they signed at the beginning. The unfortunate part about our legal system is that verdicts rarely make sense. I'm thinking Rambus will be lucky to get close to what they might have gotten without the 100 million they have spent on litigation. Sad.
By the by - I'm aware the tone of my recent posts suggest a short bias but it's more a matter of frustration - I'm still long but not seeing the pot of gold at the end of the rainbow.
Holy Crappola - it would appear that people have been vastly overestimating (myself included) the amount of past damages Rambus might collect from Hynix.
4.4 billion * 3.5% royalty rate is only 154 million
Chump change.
Will be delighted to be wrong.
Got the same sense of foreboding as you, TJ. Where's the Judge Jordan that so highly respects Whyte?
Thanks Docrew0 - no decision made on motion to enjoin - they will be scheduling an argument in Jordan's court in the not-to-distant future. Think Rambus has a strong point about precedent and claim splitting - hoping Jordan thinks so as well.
You're right, TJ - wrong bird - apparently it was an eagle.
He had Hephaistos (Hephaestus) shackle Prometheus to the side of a crag, high in the Caucasus mountains. There Prometheus would hang until the fury of Zeus subsided.
Each day, Prometheus would be tormented by Zeus’ eagle as it tore at his immortal flesh and tried to devour his liver. Each night, as the frost bit it’s way into his sleep, the torn flesh would mend so the eagle could begin anew at the first touch of Eos (the Dawn).
I also got the eyeball part wrong - they are going for the liver. Oh well - my greek mythology is weak.
All this litigation does remind me of another greek tale - the one of Sisyphus (not syphilis - that's a more sordid tale) and pushing the rock up the hill. Then's there the reference to Scylla (Payne) and Charybdis (FTC) that is apt as well. No wonder Da Greek follows this stock.
Let's hope history repeats itself and the Union prevails.
It's all about the emancipation of our beloved Bus. As Prometheus gave fire to da Greeks, Rambus has given CAS latency to the world. It is time to remove the shackles of litigation and smite thine enemies. Unfortunately right now, it feels more like the vultures are plucking out Rambus' eyes.
Calbiker can correct me if I'm wrong, but the PE=5 was only in reference to the component of revenues represented by SDRAM/DDR royalties derived from patents scheduled to expire in 2010.
Mr. Amir from Hambrecht is trying to arrive at a valuation for Rambus assuming that their total takeaway from Sammie, Hynix, and Micron for past damages is 936 million (he believes damages could be as much as 1.4 billion but doesn't believe they can collect on it all). This includes damages from the AT suit. Where he gets cute is in applying a valuation other than 1 for cash. (BTW - after taxes of 40%, 936 is reduced to 562 million). He applies a 3x multiple for sales and then divides by shares outstanding (he uses 104 million) and arrives a price/share of 27 for past damages. Then he values Rambus ongoing operations at 11/share for his total of 38.
The WSJ article is a little confusing on this - Mr. Clark from the joural is just regurgitating Mr. Amir's analysis. I personally think Mr. Amir is being generous on his valuation of the cash component.
The only analyst that covers this stock thinks 38 is a full valuation for Rambus. That's not a lot of upside from current levels. I'm still waiting to see a compelling valuation justifying higher prices. I know Mr. Currin has higher targets, but this is also the same guy who said Rambus was worth 1,000 a share at one point.
I'm cautiously pessimistic.
OT - World's richest people from Forbes. This is one of the more interesting names in the list of richest people. I suppose I could live with a name like that if I had 3.3 billion too.
http://images.forbes.com/media/lists/10/2006/7XUE.jpg
Courtesy of PartyGaming.com
Anurag Dikshit
$3.3 billion
Country Of Citizenship: India
#207
Age: 34
More on Anurag Dikshit >
A D V E R T I S E M E N T
This is an extremely conservative 'win' calculation, but still valuable. What they fail to mention is that Rambus will be buying other companies with that cash. They already stated so.
Nothing like a discussion of valuation to get the cheerleaders all riled up. I have a very hard time, using reasonable assumptions, to arrive at a triple digit price per share valuation. Unfortunately, as the WSJ points out, it is a crapshoot. Trying to value this thing requires making tens or hundreds of assumptions and this will most likely not play out the way the majority might guess.
First, Rambus needs a verdict of infringement - trying to determine a valuation is putting the cart before the horse. Assuming Rambus gets that, what is the royalty rate that the jury deems fair? Will having to post a bond be onerous enough to bring Hynix to the table or should we expect two more years of delays while Hynix appeals up to the SC?
A couple quotes from the WSJ piece that I completely agree with...
"A legal settlement is akin to cash, it's not an asset, and cash doesn't deserve any kind of price/earnings multiple, there's no growth or risk to it," says Aswath Damodaran, a finance professor at New York University's Stern School of Business,"
This reminds me of Intergraph (INGR) - another IP play. They announced a 200 mill settlement with Intel and the market value of the stock increased by less than the settlement amount. The street does not get excited about cash - cash flow, yes - but not cash.
That brings me to Cal's point about Rambus acquiring someone. First, who would they acquire? TSRA, IDCC, ARMHY, MIPS??? Or a small private company that no one has heard of? You don't usually see a stock surge after the announcement of an acquisition.
The other interesting quote from that WSJ article is the quote from Mr. Cohen... "The retail crowd" of individual investors, "only see the good news," says Michael Cohen,
I think he's saying that the retail crowd is blind to potential pitfalls - agree there. There are some rabid longs following this stock and as the saying goes - a fool and his money are soon parted.
Best of luck Cal! Like TJ said, take care of yourself and don't think twice about the trial or anything else until that rhythm is normal - not going to do anyone any good if they have to get the paddles out in the middle of the trial.
This is from Elixe on TMF...
Listened to the Rambus CC with Morgan Stanley.
What I thought were some notable comments. Paraphrasing:
Thinks Hynix trial should be complete in three - four weeks.
PCIE is an industry standard. Patent contribution not that significant. Not a focus of the company.
Samsung and Elpida are suppliers of XDR. (Seems to confirm my belief that Toshiba has dropped XDR from their portfolio). Working well with Elpida, Samsung relation seems to be strained. Only natural.
Doesn't have other consumer customers for XDR yet.
Would like to do business with nVidia and/or ATI. Thinks XDR2 would be attractive to them.
As for the PC, neither Intel or AMD would consider XDR until it was in high volume production, (commodity product volumes).
Mentioned the old TAM number of $250 Billion.
Intel $10 million/quarter is going away. No talk of renewal.
JMOs, though
Emphasis added! I'm starting to lean toward the blustering fool assessment of Hughes.
Speaking of which, are you planning to attend any part of the trial?
Well Nic - if you are going to be there at the same time as Cal, make sure you bring your resume. ;> The two of you might be able to start an IP company of your own.
Since the beginning of this short year, RMBS mgmt has exercised 2,216,808 options for gross proceeds of 70,234,658
Not a bad haul for these superstars! Someone wake me up when the Rambus shareholders get their payday!
o EULAU ROBERT K 0 6 CF Sell 1/9/2006 45,000 $22.01 17,216 $990,450
op DANFORTH JOHN D 0 0 VP Sell 1/17/2006 40,000 $31.46 13,003 $1,258,400
op EULAU ROBERT K 0 6 CF Sell 1/23/2006 211,713 $30.57 17,216 $6,471,550
FARMWALD MIKE 0 0 D Sell 1/24/2006 100,000 $34.13 2,870,936 $3,413,000
o PATEL SAMIR 0 0 VP Sell 1/24/2006 88,431 $34.16 84,405 $3,020,802
o DONNELLY KEVIN 0 8 VP Sell 1/25/2006 94,000 $34.84 27,268 $3,274,960
DUNLEVIE BRUCE W 5 4 D Sell 1/25/2006 38,000 $34.91 411,492 $1,326,580
o SCHROEDER MICHAEL C 0 0 VP Sell 1/25/2006 17,500 $34.36 0 $601,300
o STARK LAURA 0 0 VP Sell 1/25/2006 63,328 $35.11 31,505 $2,223,446
op MOORING DAVID G 0 5 D Sell 1/31/2006 543,800 $32.88 580,622 $17,879,280
op DANFORTH JOHN D 0 0 VP Sell 2/1/2006 10,000 $27.78 49,606 $277,800
op EULAU ROBERT K 0 6 CF Sell 2/2/2006 93,287 $27.25 17,216 $2,542,070
FARMWALD MIKE 0 0 D Sell 2/27/2006 50,000 $31.48 2,805,936 $1,574,000
op MOORING DAVID G 0 5 D Sell 2/28/2006 516,749 $30.22 690,622 $15,614,470
op DANFORTH JOHN D 0 0 VP Sell 3/1/2006 5,000 $31.51 49,606 $157,550
op MOORING DAVID G 0 5 D Sell 3/3/2006 300,000 $32.03 710,622 $9,609,000
2,216,808.00 70,234,658.00
I'll bet I was programming microprocessors before you could spell the word junior
Geez Nic - I think you're starting to sound a little "Al Gorish" - next thing you know, you'll be claiming you invented RAM and that Farmwald / Horrowitz actually stole their revolutionary ideas from you!
Hope Stk does not mind the repost here from TMF, but it further adds to the debate...
And then there is this from Calbiker on ihub;
“Speaking of which, look at all the recs for stk_hawk's CAS latency post. It's wrong. Doesn't anybody do their own thinking there?”
http://www.investorshub.com/boards/read_msg.asp?message_id=10003735
“About 4 weeks ago someone listed the claims going to trial. If that list is correct, then stk_hawk's list is incorrect. It's extremely dangerous to conduct a patent search using 'rambus' and the last 3 digits of the patent. Some Rambus patents have the same last 3 digits. Looks like he has the wrong '916 patent listed. His conclusions are as well quit iffy.”
http://www.investorshub.com/boards/read_msg.asp?message_id=10004090
Well with all due respect (and I do respect Calbikers technical analysis – i.e. difficulties in DLL design around for example) his infringement feature analysis is incomplete because it does not comprehend the issue of dependent claims.
But first of all, just because I only listed the patent abbreviation in my original post (i.e. '918 and '916) that does not mean I did not have the full patent numbers or that I simply did a patent search using “rambus” and the last 3 digits of the patent. I did my analysis using the full patent numbers as listed in the legal brief which identifies the 10 claims Rambus selected.
http://investor.rambus.com/downloads/2005-01-21%20Rambus%20Election%20of%2010%20Claims%20for%20Trial...
So with that out of the way, let's looks at the dependent claim issue.
A closer look at the 10 claims Rambus chose to take to trial, reveals that all of the claims are dependant on other claims. For example, claim 34 of the '105 patent is also dependant on claim 31. What does this mean to Greg Stone? Well it means that in order for Greg Stone to convince a jury there is infringement of claim 34 of the '105 patent, he also has to prove infringement of claim 31. As a consequence, there are other Rambus IP features contained in the dependant claims, which Calbiker's analysis fails to comprehend.
Here is a summary of the dependant claim issue for the 10 claims Rambus selected for trial.
'105 claim 34 (dependant on claim 31)
'918 claim 24 (dependant on claim 18)
'918 claim 33 (dependant on claim 18)
'120 claim 33 (dependant on claim 29 which is also dependant on claim 26)
'020 claim 32 (dependant on claim 31 which is also dependant on claim 30)
'020 claim 36 (dependant on claim 35 which is also dependant on claim 30)
'916 claim 9 (dependant on claim 1)
'916 claim 28 (dependant on claim 26)
'916 claim 40 (dependant on claim 26)
'863 claim 16 (dependant on claim 15 which is also dependant on claim 14)
As a side note, this dependant claim issue also has ramifications on Hynix's invalidity arguments at trial (i.e prior art defense). For example, in order for Hynix to invalidate claim 33 of the '120 patent due to prior art, Hynix must produce prior art that not only invalidates ALL of the elements contained in claim 33, but also ALL of the elements of claim 29 and ALL of the elements of claim 26.
It would appear that Calbiker does not comprehend this requirement of patent law either, but I find it very interesting that the resident patent lawyer from the “firm” isn't educating Calbiker on this aspect of patent law either. Perhaps it might complicate his simple DLL design around arguments he is putting forth. Imagine that, other issues that need to be designed around other than just DLL.
Per Nic
Again to repeat the theme: the key thing here is, if they DON'T win on DLL, there is no "DDR" specific claim infringement.
Per Cal's post...
We've done this before. IMHO there are 6 inventions.
1. Synchronous memory operation
2. CAS latency register
3. Burst length register / variable block size
4. Precharge as a part of read or write cycle
5. Dual-edge clocking
6. On-chip DLL
The first 4 relate to SDRAM. All 6 relate to DDR.
Think Nic would have been more accurate saying "unique" than specific. It looks to me like everything in SDRAM is also in DDR. I understand Nic's point that it doesn't make sense to pay 3.5% on DDR and .75% on SD if there are no more patents infringed on DDR. First, I think Rambus wins on DLL - just a WAG. Second, I think past damages is the lesser issue here - do some math in a second - the bigger issue is Rambus success at getting an injunction. A question before I get to the math - what are the chances that Whyte grants Rambus an injunction but does NOT grant Hynix a stay pending appeal? That would certainly put some pressure on Hynie. Not sure what the precedent is for that.
Back to math - Of the 29 claims originally at suit - how many are unique to DDR? I don't know. But for sh*ts and giggles, let's assume the jury is going to look at this purely as a numbers game - maybe they don't understand what latentcy or on-chip DLL vs off-chip means and they will aproach this from a "how many claims are infringed" standpoint. There were 29 claims of which Whyte granted SJ on 11. Of those 11, I think 2 are at suit with the jury - so let's say 9 are confirmed infringed. (Just curious if anyone knows of those 11 that were granted SJ - how many are unique to DDR?) Now, let's say the jury finds that 7 of the 10 at issue in the trial are infringed. That brings the total number of infringed claims to 16 out of the original 29. Now, let's say a licensee was willing to pay 3.5% on DDR and .75% on SD. I think the jury would agree that someone who opts to litigate should pay double. So it's 7% and 1.5% but Rambus only won on 16 out of 29 claims so the new ratios are 16/29 * 7 = 4.14 for DDR and 0.83% for SD. Now, let's assume half of Hynie's sales are directly to the US - the new rates are now 2.07 and .41. Let's assume SD was 33% of sales for years infringed and the rest was DDR. I get a blended royalty rate of 1.52%. Now Hynie has been infringing for 6 years? - we'll assume an ave 25 billion in sales and Hynie with a 18% market share. I come up with 68.5 million a year in past damages or a total of 411 million. This number surprises me on the high side. Anyway, this award means 4 bucks a share in cash to Rambus and we value cash at cost so the stock should move up 4 bucks. Not a big deal for such a big win.
The big deal is whether Rambus can prevent Hynix from selling RAM in the US because a jury has just found that all Hynix RAM infringes and Rambus has said "we will not license you". Nic claims they can work around DLL - ok but what about the other 13 (3 claims on DLL) claims that Hynix infringes that are also in DDR. Think Dell is going to buy memory from Hynix that is untested and unproven with 16 claim workarounds? Doubt it. Hopefully an injunction is granted and the the appeals courts move quickly with this. If it takes two years to finalize this, I would think Rambus would have a solid case of willful infringement on those two years and could collect treble damages on those infringing sales almost all of which will be DDR.
Then there's the AT suit. I think the pressure has to be acute.
Speaking of which, look at all the recs for stk_hawk's CAS latency post. It's wrong. Doesn't anybody do their own thinking there?
There might be two or three guys (yourself included) that understand the technology/patents well enough to rebut Stk's analysis. Most of the people that follow Rambus and post on message boards are dummies like me who aren't electrical engineers and aren't patent lawyers. Given that this is what Rambus is all about - litigation and cutting-edge technology - it's kinda ironic. I sit there and read these debates and these posts and counterposts and I find myself feeling wishy-washy. Nic will post something that sounds convincing and I'll think he has the right of it and then I'll read a post by Stk or Cal and think they are right.
Warren Buffett wouldn't approve of me holding this stock given I have no special experience in law or tech so I continue to question my sanity in investing here. I do know why I'm here however - and it's greed - pure and simple. Even a dummy like me can do the math on 3.5% royalties on a 25 billion market (I am unequivocally NOT saying I believe this is the type of revenue Rambus can achieve but even half that will be a decent haul).
I'm still trying to figure out what's protected and what's not in the AT case. Shit, I'm still trying to decipher some of LOLo's posts. But, from a big picture point of view, I see this stock going higher because I see Rambus winning the infringement trial and not losing validity or enforcability in phase III. I see settlements at some point (look at RIMM) and I see the euphoria bringing in some buyers (probably the momo guys who will sell a week later). And my final prediction, which you can take to the bank, is that some of the prognosticators will be right and some will be wrong.
MisterPeabody did a hell of a lot better job rebutting Nic's assumption on Teece and worldwide sales. From TMF...
"The results have me confused on the former, since on the one hand he is allowing Teece to talk about a higher rate, but on the other hand he is seemingly restricting it to US sales." - Nic
I disagree with your interpretation on this point. From the opinion on motion 11 to exclude portions of Teece's testimony:
"Hynix also objects to Teece's use of Hynix's worldwide sales data to calculate a reasonable
royalty, noting that it is undisputed that Rambus cannot recover for foreign sales. Rambus licenses
the patents in suit on a worldwide basis. According to Teece, changing the royalty base from the
world to the United States would increase the rate. Contrary to Hynix's argument, Teece's opinion
does not try to award damages for foreign sales. Instead, it merely takes these sales into account to
make the point about Rambus's damages in the United States...The court denies this aspect of the motion."
The opinion clearly denies Hynix's objection that the royalty be calculated from the Rambus royalty rate on the worldwide sales base. Teece's view is the 3.5% (possibly doubled as a result of Hynix's litigation)is reasonable for the worldwide sales base. If the sales base used for the calculation of the royalty is restricted to the US, then the reasonable royalty rate would be inversely higher to compensate for the decrease in base. "("generally
speaking, the royalty rate and royalty base have an inverse relationship, so that when the base goes
down the rate goes up, and vice versa")". In quoting Teece's comment on this point without objection, and then denying Hynix's motion in the following sentence, Whyte gives evidence that he concurs with this viewpoint.
Worldwide sales figures for Hynix are available and accessible. Given that Whyte appears to be allowing the worldwide figures to be used as the base, it is irrelevant for the calculation of the base what sales in the US are "direct" or "indirect". Rambus (Teece) is simply restricted in using indirect sales estimates in arguing that their arguments for a "reasonable" rate are "conservative.
Mister Peabody
From Nic on TMF
It seems to me that Rambus is not going to be able to recover on all of Hynix's production: just on the fraction which comes into the US, and of that, only the part that they can directly tie to Hynix. So I don't know what the projections look like, but I wish we had Cor around to give us firmer numbers to start with.
I think/hope Nic is not reading this correctly. My sense is that Whyte is restricting Teece from guestimating the amount of "indirect" sales Hynix does which is NOT the same as saying that only Hynix direct sales to the US are actually at stake here; that would be a major blow to Rambus and given Whyte's even-handedness thus far, I would find that surprising. I believe Hynix global DRAM sales figures are readily available so there shouldn't be too much controversy figuring out those numbers. But Nic is the expert here - I'm just a hack.
The biggest win on the motions is definitely the order keeping out the garbage from EVDA. If Micron is successful shipped to NDCA, then Sammie and Mickey are in the same boat as Hynie in that they can't complain about the "unfair" disparity between rates and can't present a jury with the Infineon rates. Big win.
Only 11 more days before the start - man I wish I had a ticket to the show. Hopefully the "free-press" will be there - TDOX is already working overtime - hopefully LOLo, CAL, Mutsgawa, and JMKEL will also be attending and yuk (can't remember the spelling).