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Saturday, September 09, 2006

Weekend Edition: Poor Analyst Call Of The Weak: Rambus (RMBS)

AmTech Research initiated Rambus as a "buy", but the horse had left the barn.

Rambus is already up from $14 on August 29 to $17 in trading today. The upgrade accounted for a $1 of the move. Word came last week that a federal court had made a ruling in the patent suit that Rambus has against chip company Hynix Semi. An analsyst quoted in the WSJ indicated that the action could benefit Rambus in the near future: BWS Financial analyst Hamed Khorsand said the stay means that regardless of the final ruling, Hynix will have to pay royalty rates to Rambus.

Rambus still has more than its share of problems. The company is late in filing its 10-Q with the SEC and faces a potential Nasdaq delisting. The company says it will appeal the action, but if the filing is not completed before the Nasdaq review, the company may have to move to the Bulletin Board.

The company had revenue of $47.2 million in the last quarter its was able to report, March 31. The company had an operating loss of $464,000. It had reported operating profits the in the three immediately preceding quarters.

Rambus stock trades at 9.9 times sales, even through its has collapsed from a 52-week high of $46.99. Micron Technology, which is in a business very similar to Rambus, trades at 2.5 times sales.

With the uncertainties the company faces, a stock that looks cheap may not be.

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