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She didn't BUY anything. Check the price. Must have been a gift or award.
I've never paid a fee for any stock transaction on eTrade
No fees at eTrade
That could explain it. We can all hope.
Just reflecting on the tone of the call. There didn't seem to be any enthusiasm at all. It was as low key as possible with a hurry up and get it over with attitude. Not one mention of any future activity.
Is Chuck getting ready to throw in the towel?
Before the flaming starts, let me say that I am a 10+ year holder of over 100K shares. Yesterday's conference call definitely was a downer for me. They didn't once say anything of a positive nature of what is going on with the business. It was a very low key reading of the numbers and recap of the cases. Nothing was said of anything looking forward. We know they just hired some new marketing people, so why no mention of what is expected of them or what the plan is? No need to give away all the secrets but just some mention of what the plan is and what the expectations are would have been very positive and something that people would have liked to hear. What about new products? Once again no need to give away any secrets, just some mention of types of products under development. Some conversation of expectations of new alignments with other manufacturers or a report on how things are going with Hynix would have been nice. All in all just a terrible call.
Because of the lack of any positive news, and the tones of voice from both Chuck and Gail, it seems to me that they are done.
What happens when Hong gets too old to continue?
Is there some sort of plan as to what will happen when Hong can't continue. He is starting to get up in years, and I'm sure he is under a ton of stress. What would be the continuation plan?
Last I heard it was about 75 million
You missed the important part, where he says there will be no further opening of the door to IPR proceedings
Is the poison pill still effective?
Netlist: A Strong Sell Due To Weak Performance And Overvaluation
Jan. 15, 2024 2:13 AM ETNetlist, Inc. (NLST) StockSSNLF11 Comments
Akim Guerreiro profile picture
Akim Guerreiro
10 Followers
Summary
Netlist is a U.S. semiconductor company that manufactures and sells memory chips.
NLST stock has underperformed the S&P 500 since its IPO in 2006, with weak financials and inefficient resource allocation.
Legal battles with large corporations and lack of growth prospects despite sector tailwinds further support a Strong Sell rating for the stock.
Flag of USA on a processor, CPU Central processing Unit or GPU microchip on a motherboard. US firms have become the latest collateral damage in US-China tech war. US blocks sales of AI chips to China.
William_Potter
Business Overview
Netlist Inc. (OTCQB:NLST) is a U.S. semiconductor company founded by a former LG Corporation employee, Hong Chun-ki. The company manufactures, designs, and sells a wide range of semiconductor products, in particular, memory products for cloud, datacenter, storage, and other types of B2B customers.
Taiwan, a semiconductor superpower, had important elections with the incumbent (and pro-US) Democratic Progressive Party having won a third time in a row. This status quo could result in further escalation by China. Therefore it is likely that semiconductor stocks will have increased volatility in 2024 - and there is room for profit making, both on the long and short sides of the sector. I will discuss a stock that, in my opinion, one can short to benefit from the volatility.
Poor Stock Performance & Investment Thesis
Since its IPO in 2006, the stock has been underperforming the S&P 500 by a wide margin. Indeed, since 2006, the stock is down -80% while the U.S. index is up more than +230%. If you went long on the stock, you would have painfully underperformed the overall U.S. market. But we know that past performance is not indicative of future performance, and therefore we will look now if anything has changed since.
Outperformance of the S&P500 relative to Netlist
Seeking Alpha
Netlist Inc. has essentially been marooned in legal battles, and their outcomes could dictate either a decline of the company or it could renew its hope to gain the long-awaited competitive edge against its much larger competitors. I lean towards the decline of the company and I will present my case for shorting the stock, but also some key risks to watch that would invalidate my Strong Sell rating on the stock.
Fundamentally Weak Financials
Looking at the financials, the chart is not more attractive than its stock performance.
Revenue and net income of Netlist
Seeking Alpha
Indeed, despite rather steady revenue and net income levels over the years, we can see a sharp decline in both in the recent years. Revenue and net income have reached some of the worst figures since IPO, showing the company struggles to sell more while spending more. This means the company is inefficient, probably due to a wrong allocation of resources in my opinion. We will come to it later, but it is likely that management's focus is more on winning legal battles against potential large long-term customers (harming growth prospects) than on making the company more cost-effective and reaching higher growth levels. Indeed, when we zoom into 2021 and 2022, the years where revenue exceeded $100m, we observe negative and deteriorating ratios, indicating the company struggles to turn profitable over time.
ROA, ROIC, ROE ratios of Netlist
www.tikr.com
The exception is the 2nd quarter of 2021 when we saw a spike in revenue, in part due to the execution of a comprehensive licensing agreement with SK Hynix. Interestingly, SK Hynix Inc. is one additional company that made it in the list of lawsuits from Netlist, accused of also violating patents (more on that later).
In my opinion, the company falls under the Strong Sell rating because it failed to capitalise on the revenue spike and remain profitable. Looking at the valuation side, my Strong Sell rating is further confirmed.
Indeed, the valuation metrics available on Seeking Alpha show that the stock is trading at a 2.5x premium in relation to the sector medians of 2.94x EV/Sales (TTM) and 2.88x (FWD).
Expensive stock trading at a premium vs. peers. Expensive valuation of Netlist.
Seeking Alpha
In my opinion, as described above, the lack of corporate efficiency and sustained financial growth do not justify a valuation at such a high premium. Looking ahead, it does not seem that the company has sufficient focus on improving its internal situation and continues allocating resources to legal battles with potentially large customers.
Legal Battles Affecting The Business' Long-Term Viability
Indeed, the already poor prospects of Netlist brand continue to take further hits as the management continues to sue large corporations such as Samsung Electronics, Alphabet and Micron Technology. Netlist's biggest good news in years was when a Texas court, the Eastern Federal District Court, ruled that Samsung must pay $300 million (equating to 5x TTM revenue of Netlist!) to the plaintiff for patents' infringement. Samsung appealed and the US Court of Appeals for the Ninth Circuit ruled in favor of Samsung last October.
These legal battles against large corporations could end in a short-term boost (in case of unlikely new favorable rulings) but the reputational damage suffered by Netlist could exclude it in the long run from new business opportunities to turn around the company.
Therefore Netlist's poor prospects comfort further my case for a Strong Sell.
Main Aspects That Could Invalidate my Strong Sell
The main risks to my stock shorting case are actually not from within the company, but external. Indeed, with the tensions between Taiwan and China, and the scarcity of chips, the U.S. CHIPS Act is looking to provide support, regulatory and financial, to chip manufacturers based in the U.S. Should Netlist receive support from the U.S. government, investors could pivot and enter the long trade of the stock. I see this as a minor risk still, as the U.S. government through the Commerce Department only participates up to 15% of project capital expenditures, unlikely to significantly provide a competitive edge to Netlist in relation to the larger U.S. chip manufacturers.
Another key risk could be the company winning its lawsuits against the corporations it is suing, as it would both boost its cash reserves but also open the door to a potential acquisition of the company by a larger chip manufacturer, eventually a foreign company aiming at gaining a foot in the U.S. market through Netlist, which would have both significantly improved its cash position and secured its patents through the lawsuits. This is of course possible, but it is unlikely that an acquirer would pay a 150% premium in relation to the sector median as discussed in the valuation section.
Bottom Line: The Stock is a Strong Sell
Netlist is a good candidate to open a short, with sufficient reasons to support the Strong Sell rating. Weak financial performance, unjustified valuation and lawsuits with former large clients altogether are a poor combination to justify fresh capital entering the long side of the stock trade.
Increased volatility due to the geopolitical situation around semiconductor chips and the U.S. CHIPS Act could invalidate the Strong Sell rating in the short term, but the fundamentals of the company since its IPO, persistent underperformance, and improper resource allocation in the company's business plan make this stock a Strong Sell.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
This article was written by
Akim Guerreiro profile picture
Akim Guerreiro
10 Followers
Akim is a professional portfolio manager in the lovely, medieval-vibe financial heart of Europe: Luxembourg. He graduated from a business major, oil and gas minor, and in the earlier years literature studies, having studied in France, in the U.S. and in Russia. He works as a portfolio manager for various alternative investment funds active in different asset classes and geographies.Akim can be categorized as a value investor, although he may integrate some opportunistic plays as a small share of his portfolio. Akim loves writing, analyzing stocks and elaborating portfolio strategies. These are all reasons motivating him to contribute to Seeking Alpha with quality content.Akim's articles may include tips on portfolio allocation, and how to construct portfolios based on risk and reward ratios and return expectations. Akim is certified by the Corporate Finance Institute as a Capital Markets and Securities Analyst (CMSA), a Financial Modeling and Valuation Analyst (FMVA) and a Commercial Banking and Credit Analyst (CBCA).Akim is since early 2022 a Popular Investor on the brokerage platform eToro under the username Etcaetera where his publicly available portfolio is displayed.
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Maybe we will be this lucky in Germany and see the Micron BOD headed to the hoosegow:
Broadcom wins patent infringement case against Netflix in Germany
09:17 AM | Netflix, Inc. (NFLX) | By: Sinchita Mitra, SA News Editor
Broadcom (NASDAQ:AVGO) said a district court in Germany fined Netflix (NASDAQ:NFLX) €7.05 million for its infringement of a AVGO patent.
The chipmaker said the fine was for NFLX's continued infringement of the patent in deliberate violation of the court's Sept. 14 judgement.
The patent covers key features, which is often used in HEVC/H.265 video coding, which Netflix (NFLX) uses to encode and stream Ultra HD content to subscribers
The court has set the fine at €150,000, or in the alternative 15 days of imprisonment for members of NFLX's board of directors, for each of the 47 days that Netflix had infringed in violation of the cease-and-desist order, AVGO added.
The streaming platform may appeal the fine, and Broadcom (AVGO) will seek additional penalties for Netflix’s (NFLX) continuing violation of that order.
Penalties for violating the cease-and-desist order include government fines of up to €250,000 and/or up to six months’ imprisonment for members of the infringer’s board of directors for a total of up to two years’ imprisonment.
More on Broadcom
• Broadcom Has The Potential To Be A Strong Compounder
• Broadcom's Big Rally May Not Be As Bullish As It Seems
• I'm Up Over 365% On Broadcom - Here's Why I'm Not Selling
• Intel unveils AI offerings as semiconductor index hits record
Striper, SS has billions in cash. I don't think necessity has anything to do with it.
Wishfull thinking department:
If Judge Gilstrap is tired of fooling around with Sammy waiting for them to settle, his order after the temporary royalty hearing could be to charge them 2 or 3 times what the royalty should be. That should bring them to the table.
Something is definitely wrong. You should have 0 fees for anything other than otc
I was mistaken on the eTrade fees.
I was confused, I'm almost as old as Striper so forgive me. I went and looked at some tickets from old trades and though non-otc were 0 fees, the otc from 2021 showed a $4.95 fee for NLST no matter the number of shares. This goes back a few years since I am sitting pat since Jan 2021 I haven't bought or sold any of my shares.
eTrade is not Schwab. It was bought by Morgan Stanley but the fee structure did not change. On my netlist trades, whether 100 or 10,000 shares, I get this goofy 6 cent charge added to the bottom of the ticket. I forget what they call it.
They used to charge $6.95 years ago, but not now. At least I don't pay any fees.
I thing they charge like a 6 cent fee or something goofy like that. Basically no fees on regular trades, OTC or not.
eTrade doesn't charge for trades.
I don't think the 9th will get it. This is a Texas case, so we'll probably go to the 5th circuit which is the most conservative one in the country.
Agree
Nobody but analyst ever gets recognized for questions.
Maybe there is something for NLST in this story:
Microsoft (NASDAQ:MSFT)- backed OpenAI is thinking of manufacturing its own artificial intelligence, or AI, chips and even evaluated a potential acquisition target, Reuters reported citing people with knowledge of the matter.
The maker of ChatGPT has not yet decided to move forward. However, since at least last year the company explored several options to solve the shortage of expensive AI chips that it relies on, the report added.
These options included making its own AI chip, working more closely with other chipmakers including Nvidia (NVDA) and also diversifying its suppliers beyond Nvidia.
It is not clear if OpenAI will move forward with a plan to make a custom chip, but doing so would be a vital strategic move and a could cost hundreds of millions of dollars a year, the report added citing industry veterans.
The company had even performed due diligence on a potential acquisition target, the report noted citing on eof its sources.
The aim to get more chips is tied to two major worries CEO Sam Altman has identified — a shortage of advanced processors which power OpenAI's software and the costs linked with running the hardware required to power its products.
Altman has made acquiring more AI chips a top priority for the AI company. He has previoulsy talked about scarcity of graphics processing units, a market dominated by Nvidia, according to the report.
Since 2020, OpenAI has developed its generative AI tools on a supercomputer built by Microsoft which utilizes 10,000 of Nvidia's graphics processing units, or GPUs.
Running ChatGPT is costly. Each query costs about 4 cents, the report noted citing Stacy Rasgon, an analysis from Bernstein. If queries in ChatGPT increase to a 10th the size of Google search, it would need about $48.1B worth of GPUs initially and nearly $16B of chips per year to keep operational.
An attempy to make its own AI chips would put OpenAI among a small group of tech giants like Alphabet's (GOOG) (GOOGL) unit Google and Amazon.com (AMZN) which have tried to take control over designing the chips which are vital to their businesses.
Microsoft is also developing a custom AI chip which OpenAI is testing, the report added citing news outlet The Information.
Demand for specialized AI chips has surged since the launch of ChatGPT late in 2022. AI accelerators are required to train and run the latest generative AI tech and Nvidia is one of the few companies which develops powerful chips and dominates the market.
Companies around the world have launched their own large language models, or LLMs, which can provide services such as content and image generation, to name a few. Google's Bard, Baidu's (BIDU) Ernie Bot, Alibaba's (BABA) Tongyi Qianwen and Tongyi Wanxiang, OpenAI's upcoming text-to-image AI tool DALL·E 3, Meta Platforms' (META) AudioCraft, SeamlessM4T, and Llama 2, and Getty Images' (GETY) model called Generative AI by Getty Images, are some of them.
I wonder if there is any chance that the NLST IP is in the middle of this.
The tech giants are creating or working on Nvidia alternatives, including Amazon's (AMZN) Inferentia chips, Google's TPUs and Microsoft, which is reportedly working with AMD on new AI chips.
Probably in Won not dollars
The fifth circuit is probably the most conservative of all the circuits.
What I'm wondering about is whether or not there is a way to find out who bought the 11M shares.
Probably central time
Recommends mostly denying bid to toss patent counterclaims
Part of Samsung-Netlist clash on memory-module tech rights
Alphabet Inc.’s Google failed to convince a federal magistrate judge in Delaware that it shouldn’t be held liable for any alleged infringement by memory modules it bought from Samsung Electronics Co. of three patents owned by Netlist Inc.
Magistrate Judge Jennifer L. Hall said Alphabet’s and Google’s request to dismiss their portions of the case should be denied in all respects but one, according to her report and recommendation filed Aug. 18 in the US District Court for the District of Delaware. Hall said Netlist’s claims of both entities’ indirect infringement should be dismissed, though she said Netlist should be allowed to amend those claims.
Hall recommended denying Google’s bid in the alternative to sever and stay Netlist’s counterclaims until the Samsung clash is resolved. She also said Netlist’s allegations of Google’s willful infringement should survive.
Samsung sued Netlist in October 2021 seeking a noninfringement judgment for several of its memory modules.
Samsung and Netlist have been sparring over rights to a basket of patented memory module technologies since their 2015 joint development and licensing agreement ran into trouble about three years ago. In a separate case, a Texas federal jury on April 21 awarded Netlist $303.15 million after finding that Samsung’s continued supply of products based on the designs in five standard-essential patents after their licensing agreement soured in mid-2020 infringed the patents.
Hall held a hearing May 22 on Alphabet and Google’s motion.
Responding to Google’s request to sever and stay the claims against it, Hall said that “it promotes judicial economy to consider the infringement counterclaims against Samsung, and the infringement counterclaims against the Google Counterclaim Defendants, in the same suit.”
She also said she’s “skeptical that dismissal would ever be an appropriate exercise of discretion under these circumstances, i.e., where everyone agrees that Rule 20 and 35 U.S.C. § 299 are satisfied.” Both Rule 20 of the Federal Rules of Civil Procedure and Section 299 of the US Patent Act are related to the conditions under which parties can join or be joined to a pending lawsuit.
The judge recommended denying Alphabet’s request to dismiss the claims against it, finding Netlist alleges “that Alphabet is itself involved in the infringing acts,” and that those allegations, at this stage, must be taken as true.
Willful Infringement Claims
Hall also said the court should reject Google’s request for dismissal of the willful infringement allegations, but she recommended giving Google a chance to seek a judgment of no enhanced damages “should there be a lack of sufficient evidence that they acted in the face of a risk of infringement that was either known or so obvious that it should have been known.”
Netlist initially sued Samsung in May 2020 in a Los Angeles federal court for allegedly breaching their licensing agreement. The judge overseeing that case ruled in October 2021 that Samsung had materially breached that deal and Netlist had properly terminated the license. An appeal of that decision is pending before the US Court of Appeals for the Ninth Circuit in San Francisco.
The day after the California judge’s decision against Samsung, the Korean electronics giant filed the declaratory-judgment action against Netlist in Delaware, which Netlist characterized in court papers as an attempt to “subvert” the Los Angeles ruling. Netlist filed crossclaims against Google, bringing the search giant into the fray.
Samsung also sought to invalidate Netlist’s patents through inter partes reviews at the Patent Trial and Appeal Board, an arm of the US Patent and Trademark Office. In May, the PTAB canceled two of the three Netlist patents involved in the Delaware case—US Patent Nos. 10,474,595 and 9,858,218, both of which Bloomberg Law estimates would’ve expired in June 2030—while upholding US Patent No. 10,217,523, which has an estimated expiration in October 2029.
Google argued in a court filing that the PTAB’s voiding of the two patents on May 8 and 9 provides good reason to release it from the case.
“Even if this case were to proceed as to Samsung on the ‘523 Patent alone, Google should still be dismissed,” it said, “as the litigation between Netlist and Samsung will determine and narrow the issues as to whether that patent is invalid and whether Samsung infringes, does not infringe, or ultimately settles—which would necessarily resolve any liability by Samsung customers like Google for Samsung products.”
A five-day jury trial is set for February 2025 in Wilmington, Del.
Covington & Burling LLP and Morris, Nichols, Arsht & Tunnell LLP represent Samsung. Shaw Keller LLP and Irell & Manella LLP represent Netlist. Quinn Emanuel Urquhart & Sullivan LLP and Richards, Layton & Finger PA represent Google and Alphabet.
The case is Samsung Electronics Co. Ltd. v. Netlist Inc., D. Del., No. 21-cv-1453, report and recommendation filed 8/18/23.
To contact the reporter on this story: Christopher Yasiejko in Philadelphia at cyasiejko@bloombergindustry.com
To contact the editors responsible for this story: James Arkin at jarkin@bloombergindustry.com; Adam M. Taylor at ataylor@bloombergindustry.com
I'm too old, and you do an excellent job.
Striper you are falling behind. The final judgment is out. No enhanced damages.
The judge has a lot more to deal with than just netlist. I would hypothesize that he rotates through the cases that he has open and pending. Seems like with his release from yesterday that he has gotten back to the Samsung case. Perhaps now is getting ready to release his final judgment.
I made the post and it started to move. Went from 7000 in 45 minutes to 22,000 2 minutes later.
It has been some time since we have had an opening with volume this low.
Thank you
Thank you
To the board moderator: Maybe you could consider unpinning the two posts pinned at the top as they are old news now?? When reading the board on a phone, those posts take up screen real estate without adding anything to the current conversation. Thank you.
It is Hong nominating himself
Hong