Netlist, Inc. (NASDAQ: NLST) designs, manufactures, and sells modular memory subsystems for the server, high-performance computing, and communications markets worldwide. It offers Hybri dual in-line memory module (DIMM), a storage class memory product, which unifies dynamic random-access memory (DRAM)and NAND flash in a plug-and-play module delivering terabyte storage capacities operating at nanosecond memory speeds.
The company has been involved in a long-term patent infringement suit it initiated against SK hynix’s RDIMM and LRDIMM enterprise memory products. A recent ITC order favored the Netlist position. The company’s shares were trading at $.15 the day before the announcement and immediately doubled in price the next day as the news came out. They have since consolidated to the current price of $.24 per share.
Recent Events
May 31, 2018. Netlist announced that the Commissioners of the United States International Trade Commission (ITC) issued a Remand Order in the investigation of SK hynix’s RDIMM and LRDIMM enterprise memory products. The Commission agreed with Netlist that it was an error for the Administrative Law Judge (ALJ) to grant SK hynix’s motion for summary determination of non-infringement and terminate the investigation without first construing the patent claims. https://finance.yahoo.com/news/itc-commission-grants-remand-order-130000028.html
April 17, 2018. Netlist announced that its Board of Directors has renewed the stockholder rights agreement it entered in April 2017. Other terms of the renewed Rights Agreement remain unchanged. The Board of Directors renewed the Rights Agreement in connection with the Company’s ongoing patent infringement proceedings. https://finance.yahoo.com/news/netlist-renews-stockholder-rights-agreement-203000536.html
Products
Netlist, Inc. designs and manufactures a wide variety of high-performance logic-based memory subsystems for cloud computing, virtualization, and high-performance computing (HPC) markets.
Netlist’s flagship products include the Vault family of cache data protection products including NVvault™, a flash memory-based subsystem that enables data retention for weeks following a disaster, and EXPRESSvault™, a PCI Express backup and recovery solution for cache data protection; and a robust portfolio of high performance and specialty DIMMs.
Netlist’s expanding and innovative flash product portfolio continues to address space constraints that occur in both cloud datacenter and enterprise class servers, storage, and embedded systems. The modules are ideal for cache acceleration in tiered storage applications as well as virtualization, boot, and operating system loaders. Portfolio products include standard PCIe mini, mSATA Slim, and mSata mini interfaces, along with Compact Flash, miniSD, and others.
The memory technologies are developed for applications in which high-speed, high-capacity memory, enhanced functionality, small form factor and heat dissipation are key requirements. These applications include tower servers, rack-mounted servers, blade servers, storage appliances, high-performance computing clusters, engineering workstations, and telecommunications.
About
Netlist, Inc. designs, manufactures, and sells modular memory subsystems for the server, high-performance computing, and communications markets worldwide. It offers Hybri dual in-line memory module (DIMM), a storage class memory product, which unifies dynamic random-access memory (DRAM)and NAND flash in a plug-and-play module delivering terabyte storage capacities operating at nanosecond memory speeds. The company also provides nonvolatile (NV) memory products, such as EXPRESSvault PCIe, a plug-and-play memory card, which offers data acceleration and data protection for server appliances; NVvault DDR3 NVDIMM comprising data acceleration and data protection in a joint electron device engineering council (JEDEC)standard DD3 interface for integration into industry-standard server and storage solutions; NVvault DDR4 NVDIMM, which provides data acceleration and data protection in a JEDEC standard DDR4 interface; and specialty DIMMs and embedded flash products for use in data center and industrial applications. In addition, it resells Samsung products; and sells component inventory of DRAM ICs and NAND flash to distributors and other users of memory integrated circuits. The company markets and sells its products primarily to original equipment manufacturers through a direct sales force and a network of independent sales representatives. Netlist, Inc. was founded in 2000 and is headquartered in Irvine, California.
Analysts
On May 31, 2018, the same day the company announced the favorable ITC decision in its patent infringement suit, Roth Capitol upgraded their recommendation from Neutral to Buy. The current target price is $.75
Two analysts covering NLST are expecting double digit revenue growth and narrowing losses.
Financial review
Revenues for the first quarter ended March 31, 2018 were $8.9 million, compared to revenues of $9.4 million for the quarter ended April 1, 2017. Gross profit for the quarter ended March 31, 2018 was $0.4 million, or 4.3% of revenues, compared to a gross profit of $0.7 million, or 7.2% of revenues, for the quarter ended April 1, 2017.
GAAP net loss for the first quarter ended March 31, 2018 was ($4.7) million, or ($0.06) loss per share, compared to a net loss in the prior year period of ($3.3) million, or ($0.05) loss per share. These results include stock-based compensation expense of $0.2 million and $0.3 million for the quarters ended March 31, 2018 and April 1, 2017, respectively.
As of March 31, 2018, cash and cash equivalents and restricted cash were $8.0 million, total assets were $16.8 million, working capital was $5.2 million, total debt, net of debt discount and accrued interest, was $17.1 million, and stockholders’ deficit was ($8.0) million.
Stock influences and risk factors
A favorable resolution to the patent infringement suit against SK Hynix could act as a catalyst for the company’s shares;
They may need to raise additional capital in the future, which may not be available when needed, on acceptable terms or at all;
They have incurred a material amount of indebtedness to fund operations, the terms of which have required the company to pledge substantially all of its assets as security;
If they are unable to timely and cost-effectively develop new or enhanced products that achieve customer and market acceptance or technologies that can be monetized, revenues and prospects could be materially harmed.
Stock chart
On Wednesday, June 6, 2018, NLST shares were at $.24 on traded volume of 1.7 million shares. The current RSI (14) is 66.66
At $.24 NLST shares are trading above their 50 DMA of $.19 and below their 200 DMA of $.39.
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