Netlist

Netlist's long patent fight with Samsung has turned into a paycheck. Samsung paid 200 million dollars up front plus a first quarterly fee of 27.5 million dollars, and 44.9 million dollars of that counted as sales this quarter. Cash on hand jumped to 327.7 million dollars, up from 40.7 million dollars just three months earlier.

Total sales hit 105.1 million dollars, up 149 percent from a year ago, and sales of its own memory products grew 43 percent on demand from AI and data center customers. License fees cost almost nothing to deliver, so Netlist kept 65.5 percent of each sales dollar after product costs, up from just 4.4 percent a year ago. Day to day, the business earned 40.6 million dollars, compared with a 7.2 million dollar loss last year.

Sales of Netlist's own memory products fell to 60.2 million dollars from 109.8 million dollars the quarter before, even though they are still up 43 percent from a year ago. That means more than 40 percent of this quarter's sales came from one source, Samsung's license fees, which follow a formula based on sales that can be adjusted. The chip business needs to bounce back for the growth story to stay balanced.

The headline profit of 85.4 million dollars includes a tax benefit of nearly 44 million dollars that will not repeat every quarter, so profit before taxes was closer to 41.5 million dollars. Patent legal bills also rose to 16.2 million dollars this quarter from 5 million dollars a year ago, and the fight with Google is still going. The stock trades over the counter instead of on a major exchange, so expect thin trading and big price swings.