RMBS - Commentary

RMBS

Many have been disappointed by the price action of RMBS since the announced settlement with Samsung.  Granted, this has been very puzzling… however, we believe there is a huge disconnect between the stock price and the importance of this settlement.

First, Samsung is THE Gorilla of memory, just as Intel is THE Gorilla of processors… but… Samsung’s product line is so diverse that we believe everyone is grossly underestimating the enormity of this deal.  This settlement and new partnership puts RMBS into virtually every device on the market that uses advanced memory.  So while we will not know exactly what the terms of the new licenses are, we suspect as revenues begin to show up on RMBS’s balance sheet, investors will be very pleased.

Additionally, this agreement puts tremendous pressure on ALL of Samsung’s competitors to acquire RMBS’s superior memory solutions or face being left far behind the already clear market leader.  The time for holding back RMBS’s innovative technologies through collusion and price-fixing have ended.  The MM’s must now innovate or die… it’s that simple.

As for our projections of RMBS’s value via market cap… there are an almost endless number of prognostications of RMBS’s worth given the Samsung settlement and educated guesses about forward licensing rates.  We simply used the most conservative of those estimates for the combination of cash and EPS going forward @ $5.00/share, with a forward P/E of 20 on the low end, to 40 on the high end, which for a high growth company, is fairly common.  Those are the figures that brought us to our value estimates of $10 - $20 BILLION dollars over the next 2-3 years.

Coach BD