RMBS update

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.