Originally posted by: Cal166
Originally posted by: HopJokey
Originally posted by: Azurik
Originally posted by: ricochet
Over 500 point drop for the DJIA. Brutal day indeed.
I think this is the worst DOW drop since 9/11 if I can recall correctly. It dropped close to 700 points that day.
I wish I had more ammo to buy RMBS.
Why, what's so great about Rambus?
I am interested as well and believe you had mention it before.
I have followed this stock for years (10+). It is, without a question, a company I know far more about than any other company I have investments in. I used to believe in the efficient market theory - that all future events are priced into the current stock price, but I no longer hold that philosphy. A big part of it due to this stock. I don't want people to just follow what I buy... but I am adamant if there was one stock this decade to own, Rambus would be it. It should not be trading at this level, and won't soon.
My neighbor is a multi-millionaire because of this stock back in the go-go days. His boss was Stuart Steele, who at one time was Rambus' largest shareholder with over 7 million shares. Mr. Steele lives in Bedford, NH which is 20 minutes away from me. He used to fly back and forth to CA for the court cases and I've met a few who attended.
Litigation always takes longer than expected, but we're a lot more closer to the end than anytime before. Anyway, this is what I wrote this sometime ago:
"If the litigation is going the way it is, then the answer is yes, Rambus will be in business for the foreseeable future.
They are currently in multiple litigations, claiming that DRAM manufacturers stole Rambus IP (intellectual property) and engineered it into their DRAM production (SDRAM, DDR, DDR2, GDDR4, GDDR5 etc.). Back in the 90's, Rambus joined a standard committee (JEDEC) to license their IP and receive royalties. Instead, they used what they learned and morphed it to avoid RDRAM (Rambus' version of RAM). Rambus left the standard group and started to sue all the memory makers. A lot of them signed to avoid litigation, but there were 3 prominent ones who countersued (Infineon, Hynix and Micron) and refused to pay. This led to those that signed to demand a lower royalty rate and caused Rambus to incur massive litigation fees. The strategy is to burden Rambus with so much fees that the company would cease to exist.
The FTC got involved and a Judge in Virginia (Judge Payne) ruled in favor of the memory makers, but both decisions got overturned at a higher court level. The majority of the decisions since then have been falling in Rambus' favor, and an infringement verdict was finally announced in California against Hynix last year. The judge just wrapped the case up earlier this week and will announce his penalty assessments, injunctions on what type of RAM, etc. very soon.
There is a lot more to this story, but that is the backdrop to what is happening now. Court proceedings are slow, but many long-term investors are seeing the end right now. What does this all mean?
Rambus claims that all forms of memory were derived from their IP. So now it doesn't matter if the market threw away RDRAM or if their new XDR is successful now, as long as the rulings favor Rambus, memory manufacturers who didn't litigate with Rambus will pay a higher royalty rate and the ones that did fight Rambus in court will have to pay past royalties on sales, pa. Not only that, but they will have to pay a higher rate on future sales then if they didn't litigate or face injunction to stop producing infringing products. This would surely spell death if the injunction is permanent.
I don't know how else to tell you guys this, but this is HUGE. Rambus' market cap right now is only around $1.6B. A ruling on damages against Hynix is expected before August. Analyst are expecting back damages of $400M alone plus ongoing future royalties. There's multiple court dates for other companies next year, and Rambus will use this case as precedent.
I have followed court proceedings on this before. I remember one time in college, a friend of ours went to the court the day one of the judges announced his decision on paper. He managed to post the decision on Yahoo! before the AP Newswire got a hold of it. I bought a bunch of calls and shares and within 5 minutes of buying, the stock was halted to annouce the news. Once it resumed in after-hours, it went bananas and I made a killing."