Netlist, Inc. (NASDAQ:NLST)

Netlist, Inc. (NASDAQ:NLST) Stock Craters on Decision

Netlist, Inc. (NASDAQ:NLST)

Netlist, Inc. (NASDAQ:NLST) stock cratered after two decisions by two different courts gave the chip manufacturer a win and a loss. NLST shares were down over 50% by the close of business today to close at $0.24 on a volume over 24 times its listed daily average.

Netlist, Inc. (NASDAQ:NLST)

Court of Appeals Decision

Yesterday, the U.S. Court of Appeals for the Federal Circuit affirmed earlier decisions from the U.S. Patent Trial and Appeal Board (PTAB) confirming the validity of certain claims of Netlist’s U.S. Pat. Nos. 8,001,434 (434 Patent) and 8,359,501 (501 Patent).

Netlist’s 434 Patent and 501 Patent cover self-test technologies widely used in LRDIMMs, SSDs, and Storage Class Memory. Netlist, Inc. (NASDAQ:NLST) asserted these patents as part of a seven-patent lawsuit against SanDisk and Diablo Technologies.  SanDisk and Smart Modular filed a total of six petitions for Inter Partes Review (IPR) challenging the validity of these two patents, which have now been resolved in Netlist’s favor by the Federal Circuit. If they so choose, the decision can be appealed to the U.S. Supreme Court.

U.S. International Trade Commission Finding

However, Netlist, Inc. (NASDAQ:NLST) also lost its case when the Administrative Law Judge Bullock of the United States International Trade Commission (ITC), issued a Notice of Initial Determination (ID) in its investigation of SK hynix RDIMM and LRDIMM enterprise memory products. According to the notice, ALJ Bullock determined that no violation of section 337 of the Tariff Act has been found with respect to Netlist’s patents in Certain Memory Modules and Components Thereof, and Products Containing Same, Investigation No. 337-TA-1023.

The parties and their counsel have not yet received the full ID, which is subject to confidentiality restrictions. Netlist anticipates its counsel will receive this document within the next few days.  Netlist will determine at that time whether further comment on the decision is appropriate.  A public version of the ID will be available within 30 days.

The ID is now subject to review by the Commissioners at the ITC. Netlist, Inc. (NASDAQ:NLST) intends to petition for review of any findings in the ID it believes are incorrect.  The Commission will then decide whether to review portions of, or the entire ID.  Once the issues under review have been briefed, the Commission may affirm, set aside, or modify the portions of the ID under review.  These conclusions will be contained in a Final Determination which is currently scheduled to be issued by the Commission by March 14, 2018.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

Netlist, Inc. (NASDAQ:NLST)

Netlist, Inc. (NASDAQ:NLST) Tanks

Netlist, Inc. (NASDAQ:NLST)

Netlist, Inc. (NASDAQ:NLST) stock is down almost 30%, to $0.60, at the opening of the market on a volume figure that indicates trading at over 127 times the daily average. Traders are reacting to the company’s pricing of its public offering of 8.5 million shares of its common stock at a price of $0.60 per share. Netlist has also granted the underwriters a 30-day option to purchase an additional 1.275 million shares of its common stock at $0.60 per share if the need arises to cover any over-allotments. The offering is expected to close on or about August 22, 2017.

Netlist, Inc. (NASDAQ:NLST)
One month stock price chart for NLST

The total gross proceeds are expected to be approximately $5.1 million. After deducting expenses, the net proceeds are expected to be approximately $4.5 million (assuming no exercise of the underwriters’ over-allotment option). The net proceeds will be used by Netlist, Inc. (NASDAQ:NLST) for general corporate purposes, including working capital and other general and administrative purposes.

The current slide in the price of NLST began on August 10, after Netlist, Inc. (NASDAQ:NLST) released Q2 2017 financials. The company’s net loss for the second quarter ended July 1, 2017, was (-$3.8) million, or (-$0.06) loss per share, compared to a net loss for the same period in the prior year of (-$1.5) million, or (-$0.03) loss per share. The slide has continued through the announcement of the dilutive public offering as NLST shares have hit new 52-week lows, eclipsing the old low of $0.83.

Irvine, CA-based Netlist, Inc. (NASDAQ:NLST) is a global provider of high-performance modular memory subsystems to original equipment manufacturers. Netlist specializes in hybrid memory – the merging of DRAM and NAND flash raw materials to create memory solutions. The Company’s patented memory technologies claims to supply superior performance, and high density in a cost-efficient solution.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

Don’t miss out! Stay informed on $NLST and receive breaking news on other hot stocks by signing up for our free newsletter!

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.