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Analyst comments rejuvenate Rambus shares

Rambus (Nasdaq: RMBS) shares closed up 83 51/64, or 31 percent, to 350 3/8 after a Morgain Stanley Dean Witter analyst gave the chipmaker a vote of confidence.

The run-up comes after the stock was battered Tuesday by troubles in Taiwan and negative comments about the company's technology on a Web site.

Analyst Mark Edelstone set a 12-month price target of $500 a share, saying the recent endorsement from Intel Corp. (Nasdaq:INTC) suggests that the Rambus investment story is on track.

"We believe that Rambus offers significant earnings power," Edelstone said in a research note. "Since we believe that Rambus DRAMs (chips) will account for half of the overall DRAM market by 2003, we believe that the company's three-year growth rate will exceed our prior expectations, and we have adopted a three-year (2000-2003) compound annual growth rate of 130 percent.

Rambus also got some good news from Integrated Measurement Systems, Inc. (Nasdaq: IMSC), or IMS, Wednesday. The chip-equipment testing company said that the integration of Rambus technology in high-performance desktop PCs, multi-media, wireless and networking products, is driving demand for its Orion high-speed memory test station sales among leading semiconductor manufacturers. IMS shares closed up 1 to 21 1/4.

Rambus shares had spiked to a high of 471 after the company announced a four-for-one stock split over a week ago. The split came after Intel Corp. (Nasdaq: INTC) chips using Rambus technology, which had been delayed due to a flaw, were finally shipped.

Rambus shares then took a downturn, partly due to a critical report on the Web site www.tomshardware.com, which tracks personal computing technology. The other factor making the stock volatile was the election of a new president in Taiwan, which sparked investors' fears of a potential impact to semiconductor makers in Taiwan.

IMS said that since Rambus reported its five validated manufacturers are ramping their production volume and are expected to deliver more than ten million RDRAM devices by the end of the first quarter, it expects to see its business improve; its Orion Memory System plays a role in testing high-speed, next-generation memory devices.

Reuters contributed to this report.