BlueStone Capital Announces Investment Opinion on DATARAM Corporation.

Business Editors

NOTE TO EDITORS: The following is an investment opinion issued

by BlueStone Capital

NEW YORK--(BUSINESS WIRE)--Dec. 20, 2000

BlueStone Capital Downgrades DATARAM Corporation to 2-1 from 1-1

Rating

Analyst Steve Loewengart Downgrades DATARAM (NASDAQ: DRAM $11.19) to 2-1 rating and lowers EPS and price targets.

Analyst's Summary

The economic slowdown is reducing the level of new installations for network and Internet servers. Consequently we are revising downward our fiscal 2000 and 2001 earnings estimates and our price targets. Our EPS estimate for FY2001 is reduced to $1.06 from the previous $1.18. We also believe that 2001 will be a time of intensified competition between the branded and compatible server memory companies. Therefore, we are also lowering our 2002 EPS estimate to $1.56 from $1.68. In light of our concerns about the higher risk that accompanies greater competition, and reduced market valuations, we are downgrading Dataram to 2-1 (Market Perform-Outperform) from 1-1. Our new price targets are $18 for the intermediate term and $24 for the long term versus our previous price targets of $32 and $39, respectively.

A significant amount of Dataram's business is linked to the number of servers that are current additions to the existing base. The number of these new additions is slowing down during the current quarter (Manufacturers will not say by how much). Beyond earnings warnings from the key providers of servers, Sun Microsystems (SUNW-Nasdaq-$26.93-Not Rated), Hewlett Packard (HWP-NYSE-$31.31-Not Rated), Compaq (CPQ-NYSE-$17.01-Not Rated), and Dell (Dell-Nasdaq-$18.25-Not Rated), and even Intel (INTC-Nasdaq-$33.43-Not Rated) has indicated that sales of its Itanium(R) chip for servers are below expectations. There is further indication of this slowdown. In recent weeks, it has been reported that Sun has been offering several promotional incentives to its resellers to sustain some semblance of unit sales volume. We are concerned, because the sales / promotional tools are able to resort to heavy discounts on the memory boards that are sold under their own label. This would directly cut into Dataram's market share. There are also an unusually large number of used servers available today as a fallout of the dot.com closures.

We see a number of conflicting forces relating to the business outlook for Dataram. Fewer installs, a loose correlation between the lower number of corporate PC's purchased with the number of network servers required, and the presence of manufacturer incentives which could effectively discount memory board pricing are negative factors. Offsetting this is the continual need for expanded memory upgrades on older installations, and this year's geographic expansion into Europe. On balance our current viewpoint is that the negative factors will cause sales reductions of 6% below our previous forecast, and a 10% reduction in EPS from our previous forecast.

BlueStone Capital is a full service investment banking and brokerage firm focused on identifying investment opportunities in the emerging growth sector. BlueStone Capital assists clients in maximizing their growth by providing sophisticated investment strategies that are designed to achieve clients' strategic, operating and financial goals. Member NASD, SIPC, and ISMA. BSR-00-463.