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Jeremy Frommer, CEO of Hedge Fund LIVE Jeremy Frommer has 20 years of industry experience and is currently responsible for general management and leadership of the General Partner. Previously, Mr. Frommer was a Managing Director and Head of the Global Prime Services Group (“GPS”) at RBC Capital... More
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  • Rambus’ Share Price Up 7.4% Today  0 comments
    May 19, 2011 9:44 AM | about stocks: RMBS

    Rambus’ share price rose 7.4% today to close at $14.15 ending its three day, 30% losing streak. At $14.15 its share price better reflects the company’s new position given last week’s court rulings but I wouldn’t expect its stock to remain above $14 for long. As a colleague of mine pointed out, rebounds like this are common and is likely to last a day or two before sellers try to drive nervous long buyers out. If this happens there may an opportunity to profit from a small rise in share price back to the $14 – $15 range. Regardless, Rambus’ share price is unlikely to rise above $15 any time soon that is barring any positive litigation news.

    Positive litigation news can come in two forms:

    First, Rambus could announce that it has decided to appeal last week’s appellate court ruling. While possible, most analysts believe this is unlikely. If it did so, then a second hurdle would need to be cleared. The Supreme Court would need to decide on whether or not to hear the case.

    Second, California’s Superior Court could provide a definitive start date to a separate antitrust lawsuit Rambus has brought against Hynix and Micron. This may boost share price slightly but once the trial is underway news from the trial will help investors better access the strength (or weakness) of Rambus’ share price.

    This lawsuit alleges that Hynix and Micron colluded to fix prices in the DRAM memory in an attempt to drive Rambus out of this market. California’s Superior Court has delayed issuing a start date in order to wait for any precedent to be set by the appellate court decisions involving Micron, Rambus, and Hynix. Many analysts believe, this second lawsuit, in terms of possible dollar damages awarded, has much greater potential payoff for Rambus then either of the two cases decided on last week. The question now becomes how relevant was last week’s ruling, if at all, on this upcoming antitrust lawsuit in California. If it is likely to have a significant impact then Rambus’ near future will remain bleak indefinitely.

    For a company that solely licenses information technology and does not manufacture anything, I clearly understand the importance of litigation. It is a necessary means of protection. But the sheer amount of lawsuits, both past and present, is staggering and the outcomes are overwhelming important on its share price. Litigation just seems to be too much of a part of its ongoing operations almost to the point that it seems Rambus maybe manufacturing something after all.

    Stocks: RMBS
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