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Rambus, Inc.
The Perfect Storm?

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By nukejohn
November 30, 2004

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Many of you here know me as I have been around for about 5 years now. I have met many of you Ramboids (Rambusarians as Joe Kernan calls us) in person. I have followed the legal cases very closely for the past four years. I was at the FTC the day the ID was released (hoping to get the good news first) where I phoned updates to people on both Yahoo and TMF boards.

Some of you may remember that I posted a message called "The Perfect Storm" over a year ago. John Danforth even used the term "The Perfect Storm" in a subsequent Analyst Presentation, which many of us got a big kick out of, although he used it in a different context. It is my opinion that The Perfect Storm started on Nov 12th at 2:15 PM, and I relayed that information to many of my fellow Ramboids via IM's or email on Nov. 13th and 14th.

For those of you who don't know what "The Perfect Storm" consisted of...it was a combination of legal events, business events, and the possibility of settlements that would all strike within a fairly short period of time leading to a triple or quadruple (or more) of Rambus' stock price. We had a false start of "The Perfect Storm" when the DOJ announced a Micron Executive pleaded guilty to Obstruction of Justice in the DRAM Price Fixing case. That announcement was followed closely by a tremendously favorable FTC Initial Decision. Many of us (myself included) thought the Perfect Storm was underway. Rambus stock rose from low 20's to 36...but alas, that was a false start.

Why do I think the Perfect Storm has now started? First, Judge Whyte's very fair Markman revealed that he is unbiased and will judge this case on the true merits, unlike other "hometown" judges who Rambus has encountered. The importance of the new Cell Processor (which I believe Rambus was instrumental in developing in conjunction with IBM/Sony/Toshiba) is just starting to become known. The DOJ, while not willing to prosecute the DRAM Price fixers and/or infringers on Rambus' behalf, has certainly been tremendously helpful in breaking down barriers and gathering information that Rambus will soon get their hands on. The DOJ did not have to spell out Rambus DRAM (RDRAM) in the IFX Sentencing Memorandum, but they did. In essence, IFX has admitted to conspiring with other companies to fix the price of RDRAM, which should make Rambus Antitrust suit a slam dunk [link to direct download of PDF court document.]

The FTC will not likely attempt to fight the facts that are emerging in the DRAM price fixing case (otherwise they could be seen as corrupt), and I predict they will drop the case against Rambus, but that is JMHO.

On top of all this...I think the only course of action for the infringers is to settle. I have no predictions on the timing of this, but the impact on the stock price will be astronomical.

When will all this occur? I haven't got a clue...it could be December...January...or it could drag out for several more months (but I don't think that is likely). However, I would be remiss if I didn't warn you that it is still well within the realm of possibility that the VA2 case will result in severe sanctions against Rambus for supposed "spoliation". But I believe Judge Whyte will look at the ACP documents and reputed "spoliation" in a different light.

In summary, I believe the Perfect Storm has started...and will continue. Do your own due diligence and do not based investment decisions on posts you read on a stock discussion board.

NJ

Disclosure: Long Rambus Stock, Calls and Leaps with protective puts.


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