WELCOME RMSI
President's Letters
September 19, 2005
Dear Investor,
Welcome RSMI!
Today we are Rim Semiconductor Company — a new company, full of fresh hope and purpose. We are proud to introduce ourselves to the world as both a valuable “pure-play” stock investment, and as a valued supplier of semiconductors that have the potential to usher in a new era of growth among the world’s telecommunications companies.
A Few Details About Our Name Change
If our past experience is any guide, investors may find today that some brokers and web-based quotation systems will take a day or so to “catch up” to the change. If you find today that your system or broker reports no trading volume or reports that NVEI or RSMI cannot be found, please be assured that the OTCBB is functioning properly, that we are still being traded, and that the reporting systems will reflect the new name and symbol today or tomorrow.
We have been asked by many investors if this name change also means that our contracts and other formal relationships have also changed. The answer is that no, there are no changes to our contracts or to our formal business relationships. All of our assets, our debt, our stock certificates, our contracts and other legal documents remain as fully in effect today as they were Friday. These existing documents could eventually be updated with our new name as the situation warrants, but otherwise are not in need of refreshing.
Our Products in the World’s Telecommunications Networks
Here at Rim Semi, we have been spending time in the last few weeks studying the newly emerging plans of the telephone companies of the world to offer video services. As we have shown in other parts of our website, the stakes for the telcos are enormous. And the threat to their very existence as carriers is now so great that they are finally forced to take action. Rim Semi – among others - has identified that the threats and the opportunities in video will likely spur a wave of new spending at the telcos that could be large enough to take the whole industry back up to the late-90’s levels of growth and profitability.
Microsoft’s IPTV initiative is just one example of a major software company that is taking aim at the same opportunity that we are. I would invite you to review the materials that they have published on their website so that you can see for yourself the massive breadth and scope of response that Microsoft has prepared in order to meet this opportunity. Microsoft’s approach is not evolutionary. It is revolutionary. Discontinuous. Different than anything the telcos have done before. And Microsoft is not alone. Alcatel, Lucent, Nortel, Redback, Scientific-Atlanta, Huawei, Motorola, Texas Instruments, Tellabs, and a host of other, multi-billion dollar giants are all breaking down the walls in order to get to market.
So where does the Embarq™ family of transport processors fit into this battle of the giants? We want to supply semiconductors to all of them. Because we sit at the lowest and most common point of the protocol stack, we are uniquely set up to sell our chips into every conceivable arrangement of products made by those companies. As long as their products are linked to the outside world by a copper telephone wire, Embarq™ (or a product like it from our competitors) will not just be an option, but will in fact be required by every giant in the battle! And because the industry is getting shaken up by the video revolution, we believe that we have an opening to introduce ourselves and our products that we might not have had just a year or two ago.
Our Competitors
So if the giants of industry are on the move, why would they choose Embarq™ over products that are made by our competitors, most of whom are larger and better financed than we are? We believe that the number one value that Embarq™ brings to the table is superior data transmission speeds over long distances. RSMI investors have noted that one of our competitors recently posted some claims about their product’s performance that caused them to question whether or not our value has eroded somewhat. I think that it is necessary to repeat the word of caution that I have given investors before: one can simply not take at face value every marketing claim that the other chip companies make.
An industry newsletter that recently put this skepticism this way:
“A word of caution about VDSL2 results. The only meaningful results are ones that are derived with the use of real distribution cable binder groups loaded up with multiple operating VDSL2 pairs. Make sure that the spectacular numbers people are reporting are measured in that way. Otherwise, the results may be optimistic.”
We believe that our competitors have not measured their results this way. But, to the extent that we can, we have measured Embarq’s performance in a strict and rigorous way. The results that Rim Semiconductor believes that we will be able to achieve when we offer the commercial version of Embarq™ take these and even more factors into account. Indeed, the numbers that we published in the past were measured on actual distribution cable binder groups (although not with multiple operating pairs because we had only made one product for test purposes), and not just calculated based on formulas and assumptions. We believe, as we have stated before, that comparison between our claims and the claims of our competitors, based on publicly available information, is meaningless at this time. The only real test will occur when our target customers place Embarq™ and our competitors' products side-by-side in a lab environment. We are eager for that showdown!
Beginning to Make Some Noise
Finally, I am pleased to tell you that we are beginning to make some noise in the industry. We have kept our products and our ideas “under wraps” for a long time. But we are now to the point in our corporate development where we have a new name, a product that is nearing completion, and a stronger balance sheet. I plan to attend the Forbes / Gilder Telecosm 2005 Conference at the end of September in order to present our products to leading target customers. I am not on the agenda as a speaker. My meetings will instead be one-on-one. You should not expect that I will tell you who specifically I meet with or what we talked about. But I do intend to share my general thoughts and feelings with you when I return. Further, I believe that when I share the great potential of Embarq™ to enable the digital home in ways that none of our competitors can, many of those industry giants will want to trial the product when it becomes available in December.
In closing, today is a big day. We have a new identity. We are coming out of our shell and laying plans to talk to customers. We have many new investors. And we are excited about building value in the new RSMI stock in the months to come.
Sincerely,
Brad Ketch
President and Chief Executive Officer
Rim Semiconductor Company
