Ramtron International: Cash in your chips
Ramtron International (Nasdaq:RMTR)
Colorado Springs, Colo.
http://www.ramtron.com
52-week low / high: $2.64/ $5.09
Shares Outstanding: 26.56 million
Market Capitalization: $125.01 million
Colorado Springs has a long history of invention and technology. Because the city is one of the most active lightning strike areas in the United States, the genius inventor Nikola Tesla built his lab and studied electricity in the city. In 1984, Ramtron International (Nasdaq:RMTR) also decided to make Colorado Springs its home.
The research and development firm makes and markets ferroelectric memory chips and microcontroller and integrated semiconductor solutions. Ferroelectric memory is non-volatile computer memory that offers high-speed writing, low power consumption and extended rewriting life. The chips can be written and rewritten over a trillion times.
When a material shows spontaneous electric — plus or minus — polarization, the material shows the ferroelectricity phenomenon. Ferroelectricity was first recognized in a crystal in 1921 by Joseph Valasek, a University of Minnesota physics instructor. Ramtron was able to create memory chips using ferroelectricity in 1992 and went public in 1993 in response to the promise F-RAM chips held. The market was slow to adopt the new technology and since going public, shares of the company are down more than 86%.
However, Ramtron has been finding additional uses for F-RAM chips and revenue has experienced an upward trend. In 2007, revenue totaled $51.1 million, up 26% from $40.5 million in 2006 and up 49% from $34.4 million in 2005. Wall Street analysts, on average, expect Ramtron to post revenue of $64 million in 2008, which would represent a 25% improvement. Ramtron says it expects 2008 revenue to range from $63.4 million to $65.4 million.
In its 2007 annual report to investors, Ramtron said its 2008 plan “anticipates growth in all of our end markets, particularly in the computing area as our custom devices for printer cartridges gain momentum.”
To drive growth, the firm released 17 new products in 2007 and plans 14 more for 2008. Ramtron expects 27% of sales to come from its metering devices segment, 34% from computing and information systems, 14% from automotive and 25% from industrial, scientific and medical.
Earnings are also improving. After posting losses in 2003 and 2005, Ramtron clocked a profit of $9.9 million, or $0.37 per share, in 2007. The yearly earnings improved more than 18 times from $0.5 million, or $0.02 per share, during 2006.
Wall Street’s opinion on Ramtron is so-so. Analysts rate the stock 2.5, with 1 being a “strong buy” and 5 being a “sell.” The one analyst surveyed by Thomson/First Call has a $10 price target on the stock. On Feb. 15, investment bank Collins Stewart downgraded Ramtron to “hold” while slashing its 2008 earnings estimate to $0.16 from $0.25 a share. In a note to investors, Collins Stewart said the downgrade was based on valuation.
For more on the company, read Ramtron International: Tough little memory chips with a big future.
Note: Ramtron International (Nasdaq:RMTR) is on the “Watch List” of Rising Star Stocks, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, Ramtron displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Rising Star Stocks portfolio at a later date.
