RMBS update

[drscott]

For those of you who care, I recommended buying Rambus (RMBS) at around $12 in August. Since then the share price has been hovering between $18 and $22 most of the time. Monday the FTC released its ruling on remedies to their finding of antitrust violations in Rambus' behavior with JEDEC; these turned out to be unexpectedly light penalties, not affecting DDR2 and beyond at all. The unprecedented delay and attempt to fix patent rates while acknowledging the validity and infringement of the patents, plus the FTC's complete failure to follow their own ALJ (Administrative Law Judge)'s well-reasoned and thorough ruling, means the FTC will almost certainly be slapped back by the courts now that it is finally possible to appeal.

I basically ignore the day-to-day news on this stock, knowing it's a ticking time bomb of patent value that will only be unlocked when the legal barrage thrown at it by the DRAM cartel is cleared, and it's not cleared yet; but this event was the beginning of the end of the unravelling of the cartel's defense structure. Even if the FTC's remedy were upheld, it's worth more like $50 now, and should things work out as I expect, triple digits are only a few years away. Most of the cartel members have been convicted of price fixing on DDR (and in some cases RDRAM), and the upcoming private antitrust case Rambus has filed against them is a giant club hanging over their heads to force settlement once it's clear the patents are valid and infringed. The further borrowing of patented features of RDRAM and XDRAM for all later generations of DDR2, DDR3, GDDRx, etc., and even flash, means virtually every electronic product now infringes, and only a tiny part of the industry is currently paying proper royalties.

Here's the story.

Comments

[pklexton.livejournal.com]

There a lot of ticked off companies with a lot of money stacked up against these guys at Rambus getting what they say they deserve. Do you think our legal system is strong enough to resist that kind of pressure? Personally, I'm too much of a cynic to place a big bet on it. But then again it's not my field of expertise.

Appreciate your informative updates as always, though. Wish I had more money to play with.

[allanh.livejournal.com]

During review of my 2006 taxes today, my CPA was highly impressed that I'd purchased a small block of Rambus at $12 on a friend's advice.

My only regret is that I didn't buy a much larger block.

Thank you again for posting these occasional tips!

[dr-scott.livejournal.com]

It would appear that all the money and power stacked up against them will only delay the outcome -- by 5-8 years, yes, but the Article 3 courts (except for one lowest-level justice in Virginia, who may well have been suborned by the Siemens/Infineon slush fund now being investigated) have always backed Rambus. These tactics might have won had Rambus not had many other friends in the industry, like Toshiba, Sony, and to some extent Intel; the DRAM cartel is actually the stupid segment of the semi industry, and is the last to catch on to the need to license IP. These people are quiet, but kept Rambus financially solvent so it could fight the backward ones.

[dr-scott.livejournal.com]

If you hold onto it for a few more years, it will most likely not be so small. But it's not wise for anyone who's still saving for retirement to take a *large* position in a speculative stock; I only do so in this case because I know the situation so well.

[orangecrush206.livejournal.com]

Good to hear that you're still high on this. I've been considering selling mine, but I'll hang on longer and see what happens.

[pklexton.livejournal.com]

"Justice" technically only applies to one of the Supremes. The rest is just plain ole judges.

Pedant to pedant.

;-)

[dr-scott.livejournal.com]

Well, shucks, you no I din get no legal edyoocashun...! I just know enough to be dangerous.

[pklexton.livejournal.com]

And you are very dangerous, indeed.