Riding the Rambus Still Too Dear for Some

Last year, a double-digit rise in shares of semiconductor designer Rambus (RMBS Quote) was as common as a dot-com millionaire.

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Riding the Rambus Still Too Dear for Some

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No longer. After a 583% surge last spring, Rambus stock has dropped by two-thirds over a year as investors have reassessed the prospects for its fundamental business, licensing chip designs to semiconductor manufacturers. Yet by many standards the stock remains expensive even now, investors and analysts say, pointing up the ongoing danger of investing during an era of boundless tech optimism.

Rambus rose to its lofty valuation at a time when cash was plentiful and rumors, innuendo and pure speculation were major market forces. Back then, investors dreamed freely of a day when Rambus would dominate the entire memory market with Rambus DRAM, or RDRAM. Chip giant Intel (INTC Quote) planned to include RDRAM with its new Pentium 4 microprocessor for personal computers, furthering those lofty daydreams. ...