Rambus (RMBS)

[EricVan]

Interesting read on RMBS..

More on RMBS..

The one and only Barry Watzman sounds off!

Hey, financial reporters .... eat it up; you are free to use this:

While market traders hypothesized about a rumor speculating that Rambus might be the object of a takeover by Sun, knowledgeable long-term investors on one popular investor board speculated on different reasons for the recent run-up in Rambus shares (from $12.05 to $17.76 in less than 30 days):

Rambus has been in an 8-year epic struggle to enforce it's patents on computer memory (almost 1,000 patents now issued or applied for). If the patents are valid and enforceable, Rambus would be the recipient of royalties on virtually all memory chips ... for computers, cell phones, digital cameras, video games, pretty much everything. The royalty income stream going forward would be approximately a billion dollars per year, not even including one-time back royalties on prior production dating back to 2000 (possibly with triple damages). That works out to about $10 per share per year, pure revenue with no associated costs.

Additionally, Rambus has a pending anti-trust case against the major memory industry players (in particular Hynix, Micron and Samsung) based on their actions to prevent Rambus' RDRAM memory from becoming the prevailing PC memory. This case is estimated, with triple damages, to be worth as much as $10 billion, and Rambus is widely believed to have "smoking gun" evidence in a case being litigated for Rambus by Joseph Cotchett, one of the premiere anti-trust litigators in the country. That could be a one-time windfall of as much as $100 per share.

Both trials (a consolidated infringement trial and a consolidated anti-trust trial) are now scheduled to occur in early 2008 (January and April). It is widely believed by those following the trials that Rambus' evidence in the anti-trust case is so strong, incriminating and damaging that the defendants in that case simply cannot allow that case to even go to trial. All 3 defendants have already plead guilty to US Dept. of Justice anti-trust criminal conspiracy charges, and Rambus is known to have received the evidence against them from the DOJ.

Now it has been learned recently from court documents that all parties and both courts (patent and anti-trust) have agreed to employ the mediation services of JAMS mediator Daniel Weinstein in an attempt to settle the whole mess, both anti-trust and patent cases, out-of-court. And, further, that there is a 2-day mediation session scheduled for this weekend.

On top of that, Rambus is one of many firms that has been facing potential delisting from the NASDAQ over delayed regulatory filings resulting from options backdating issues. However, in the past 30 days, Rambus has announced the conclusion of the options investigation by it's board's independent committee and outside investigators, and the settlement of shareholder litigation also related to options backdating. The company had said previously that it expected to file at least it's 2006 delinquent SEC forms by the end of the 3rd quarter, which is now only a couple weeks away. Thus, the delisting threat which the company has faced is also likely to soon be lifted.

Combining all of these events, and in particular the possibility of the mediation resulting in a global settlement of both the patent infringement and anti-trust issues in the relatively near future, the Rambus long-term investors simply surmise that enough people had figured out how undervalued the stock potentially was (at $12.05 in mid-August) to push the stock to a level more accurately reflecting likely and possible near-term outcomes.

http://boards.fool.com/Message.asp?mid=25899763&sort=postdate