What will Inphi CEO say in their next earnings CC on Feb 4th, 2016?
Here's some fun reading from previous calls...
N. Quinn Bolton (Analyst): "When do you think we'll start to see the first LRDIMMs using the Inphi DDR4 data buffers? Is that -- would you expect that here in the fourth quarter?"
Inphi CEO: "We're currently working with Intel and the module makers to achieve the green qualification at the LRDIMM module level and expect that in the next few weeks."
Doug Freedman (Analyst): "And on the LRDIMM front for DDR4 when do you think you might be able to impact the market share there...?"
Inphi CEO: "We are, our buffer solution is currently being evaluated by all memory vendor and is difficult to predict the timing of that revenue ramp..."
Quinn Bolton (Analyst): "Could you just tell us, are you kind of on track with that second generation data buffer...?"
Inphi CEO: "We are on track for our Gen 2 product. We do believe to enable us to capture a leadership position in DDR4. We have sampled or registered the device and expect to sample our data buffer solution in the coming three months."
Quinn Bolton (Analyst): "Can you give us some sense where you are on the second gen data buffer?"
Inphi CEO: "...we haven’t discussed specifics, we’re excited about our second generation data buffer, and believe that we will gain market share as a result. And that would translate into increased revenue starting in early 2016."
Richard Shannon (Analyst): "...a question about share in DDR4." ... "Did you mean to be that both for registers and buffers, or is it specific to one or the other?"
Inphi CEO: '...we'll begin – we think ship buffer sometime next year...'
Some Analyst: 'Any update on your DDR4 LRDIMM buffer business?'
Inphi CEO: Can't wait to hear what he has to say
Thanks bsmiles5677 for the post.
sgk1001, I just google the following to confirm: netlist craig hallum target
Btw, Richard Shannon from Craig Hallum knows what's going on, examples below:
1. From the 11/10/15 NLST CC, Richard Shannon asked: "Did I hear you say that the strategic discussions might involve both a license and potentially an investment, did I hear that correctly?" To which, NLST CEO responded, "I'm not sure whether we commented on that but they certainly involves the HyperVault technology and investment could be part of the discussion."
2. From 10/27/15 IPHI CC, Richard Shannon asked: "I wrote in my notes that you've mentioned just registers. Did you mean to be that both for registers and buffers, or is it specific to one or the other?" To which Inphi CEO had to clarify that on DDR4 "registers" are shipping today, but the DDR4 "buffers" used in LRDIMM are not shipping yet, and expects to ship next year.
Richard Shannon, clearly understands the full picture here. With the stock currently trading below $1, putting out a $3 target tells you something. Stands to reason that as more good news come out, the target would be revised up.
1. Closed at intraday high
2. Highest intraday high in recent months
3. Highest intraday low in recent months
Can't wait to hear what Inphi has to say on their earnings call tomorrow!
As noted in my last update to my other post "Why DDR4 LRDIMM modules using Inphi's Memory Buffers are not validated by Intel yet?", Inphi is still not shipping their DDR4 buffers yet. That is almost as good as an injunction. With the latest appeal court win from Friday, Inphi is basically out of options since there's no way SCOTUS would even hear this case. Given the NLST's new funding from Samsung, Inphi has no leverage.
Let's not forget that the PTAB decision for patent '912 should be out soon as well, maybe even as early as this Thursday. Where I came up with that you ask? :) Just compare the timing of '537 oral arguments and court transcript posting vs. that of '912. For '537, the decision came 3 wks after the court transcript was posted. Both oral arguments occurred in November, and the '537 decision came a couple of months later. NLST had 92 claims confirmed by the examiner going into the appeal.
The '912 patent involves Inphi, but more importantly, it involves Google as well!
Like I said, it's going to be quite a week, with news of Friday's court decision spreading, Inphi settlement talks likely, and the '912 decision on deck!
During Inphi's earnings call today, they are now guiding expectation for DDR4 LRDIMM buffer revenue in 2017. That's right, 2017!!! Does anyone still have any doubts that they cannot ship their DDR4 buffers without a licensing deal with Netlist?
For the first time, Inphi actually mentioned the Netlist lawsuit in their prepared statements during the call. Of course they still claim they are not infringing on Netlist patents, BUT, they did say, 'even if they were' infringing, it only impacts their DDR3 buffer business which is in decline because of the transition to DDR4. They have no exposure to DDR4 since they can't / haven't shipped any.
As for their DDR3 LRDIMM buffer that is infringing on Netlist's patents, they claim that business is about $20 million now due to the switch to DDR4, but you will of course have to add up the last few years revenue, especially when they were the only supplier, and before the higher density DIMM was available.
The other thing to remember is that fact that not only are they accused of 'contributorily infringing' on Netlist's patents, but they were 'actively inducing the infringement' of Netlist's patents. DDR3 LRDIMM would not be in the market if Inphi did not supply the DDR3 LRDIMM buffer. Inphi of course want to believe that at worst their exposure is the revenue from the buffer sales, but of course Netlist would disagree. Inphi on the call suggest that the infringement is more so at the system (module?) level as oppose to the buffer. That would imply that they think Netlist should be collecting greater licensing fees from the LRDIMM module makers instead of from them? I'll have to see the call transcript or listen to the call again to confirm.
Bottom line, as expected, Inphi cannot ship DDR4 buffers with a deal with Netlist, and they are losing $20-$40mm a year in DDR4 buffer revenue to Montage and IDT. Netlist will be collecting royalty from them instead of Inphi, so either way Netlist will get paid.
Very solid start for the week, especially given the decline in the overall market. I especially like that there were no crazy swings. The climb appears to be very controlled as the news of Friday's appeal court decision continues to spread and the anticipation of a PTAB decision on '912 builds. I still think that decision can come as soon as this Thursday. A positive decision on '912 will put the Google case back in focus.
Inphi's earnings call is next week (2/4/16), someone is going to ask about the latest court decision and connect the dot about why their DDR4 LRDIMM buffers are still not shipping...Unless of course they make a deal with Netlist before then.
Whatever "understanding" that Netlist has with Montage and IDT that allow them to ship DDR4 LRDIMM buffers, while Inphi could not ship theirs, I suspect a final licensing agreement is contingent on Netlist winning '537. While technically Inphi can appeal to SCOTUS, I think most here agree and as NLST CEO puts it, Friday's '537 decision is "for all practical purposes, the final step in the complete validation of the '537". Therefore, perhaps NLST can finally announce the licensing deal they have with Montage and IDT. This is all speculation on my part of course since I do not have insider info, but the evidence in the public domain is pretty clear that Netlist will be collecting LRDIMM licensing fees at some point. It's just a matter of starting when and how much. Even the most conservative estimates from LRDIMM royalties alone would value NLST much more than its current market cap. We haven't even included the NVDIMM related patents/products yet.
I want to remind everyone that the $8mm ("engineering fee") and $15mm ("investment") Netlist got from Samsung in Nov 2015 is sort of like a "signing bonus". Bashers/shorties here want you to believe Netlist sold Samsung their NVDIMM patents for just $23mm. That's absolutely false.
From Nov 2015 PR announcing the deal: "The Agreement calls for additional exchange of consideration as progress is made toward market introduction of the product."
***In other words, additional "milestone" payments ahead.
From Nov 2015 8-K filing: "Both parties may enter into an additional agreement in the future for Samsung to be granted commercial license for the Company’s NVDIMM-P technology. "
***In other words, royalty payments.
"...the Company will provide Samsung the right to acquire the Company’s NVDIMM-P technology in a separate, subsequent transaction before the Company offers the technology to a third party."
***In other words, if Samsung wants to buy the NVDIMM patents, it'll be a SEPARATE negotiated deal.
1. Closed above yesterday's intraday high
2. Highest intraday high in recent months; 3 days in a row
3. Highest intraday low in recent months; 3 days in a row where the low is above or at previous days high
It's the perfect chart. No unreliable/unpredictable crazy volume or spikes. Just a nice, steady, controlled accumulation on slightly above average volume. Love it!
A while back when Netlist was asked about DDR4 LRDIMM adoption of '185, we were pointed to examples of public info from Montage/IDT websites describing the distributed architecture being used. It was the beginning of the suspicion that Montage and IDT have some kind of agreement that they would license Netlist's LRDIMM patents once they are confirmed by PTAB. Since there are multiple LRDIMM patents involved, it obvious does not make sense to licence one patent at a time. It makes sense to negotiate all the IP licenses for the same product in one deal.
The existence of this agreement with Montage and IDT is most likely the reason why Montage and IDT are the only ones shipping DDR4 LRDIMM buffers, why Inphi haven't shipped any despite the buffers being supposed ready more than a year ago. Anyone who disagrees with this conclusion, please provide one even remotely possible reason why Inphi haven't shipped DDR4 LRDIMM buffers yet.
The likely Montage / IDT agreement does not need to be disclosed until the actual licensing terms are determined and everyone signs. It isn't material until then. Of course you cannot finalize these terms until the patents involve clears PTAB. The actual royalty percentages obviously depends on the number of patents and how critical they are. We now know that '185 and '537 are confirmed, and PTAB decision on '912 is any day now. As mentioned before, 92 claims were confirmed by the examiner going into the appeal, so chances are pretty good for Netlist, but regardless of the results, it still means LRDIMM related licensing deals could be announced soon, it's just a matter of what percentage of the multi-billion dollar market Netlist will get.
Possible triggers for next week or two. It just takes ONE of these to move NLST higher next week.
1. PTAB decision on '912 between now and a week or so from now.
2. Possible settlement with Inphi. One would expect them to be negotiating throughout the weekend with the '537 decision being out. They might or might not wait for the '912 decision to finalize any settlement though.
3. Possible licensing announcement with Montage or IDT.
4. Product update on HyperVault? A milestone payment would be great, but have no idea when though.
5. EV3 and/or NV4 related customer or order announcements. They just might be saving some of these announcements to ensure $1 for 10 days compliance.
6. Settlement with Google before or after PTAB decision on '912.
7. Some investors already familiar with NLST might be coming off the sidelines after the wash sale rule is up if they sold last month for tax reasons. Additionally, more investors might come in after seeing the recent news and price/volume movement.
There were no more attempts to stay the issuance of the official mandate on Friday, which means no more delay tactics in the federal appeal court. Again, let's hope that means they are ready to talk settlement again because clearly no memory maker is willing to use Inphi's DDR4 LRDIMM buffers without licensing deal with Netlist.
This is HUGE!!!!!
The most significant take away from today's trading is the fact that it broke through the $1.18 resistance and reached $1.26. Take a look at the intraday high for the past four trading days, and you'll see what I mean. Regardless of how it close today, breaking through that resistance is a great sign.
Even if Inphi decides to trash their DDR4 LRDIMM buffers, they still have to pay Netlist for DDR3 LRDIMM. Remember that Netlist "alleges that Inphi is contributorily infringing and actively inducing the infringement of" Netlist patents. In order words, it's not just the revenue from the buffers sales, but the LRDIMM module level sales that Netlist lost because of Inphi.
Even if Inphi announces they are trashing their DDR4 LRDIMM buffers in their next conference call, it would only further confirm that Netlist owns the key patents in LRDIMM. Netlist would still be getting royalties from other buffer suppliers Montage and IDT. Makes no difference to Netlist how many sources the royalties comes from, because the market size for LRDIMM ($3B in 2013 to $7B in 2018) would not change regardless of whether there are 2 buffer suppliers or 3 suppliers.
I cannot emphasize enough the significance of the fact that for the first time, the Inphi CFO would even state the following in their prepared statements on the earnings call today:
"...we continue to maintain that our technology does not infringe and that even if it did, we believe the exposure at the circuit level is small compared to the system level exposure..."
It's just a recap of why the appeal court sided with Netlist. The info itself is not new, but of course any exposure where Netlist is listed as the winner is good exposure. The readers of that article could be potential investors. Lawyers typically have money to invest.
Samsung is an Inphi customer (but not a 10% customer) and we know they are friendly, which is why some here suspect they would encourage a settlement between them. It has nothing to do with hedging. Inphi has no NVDIMM tech to offer. Samsung is partnering with Netlist on NVDIMM, period.
The oral argument was NOT postponed. You can check the court transcript that was uploaded in USPTO PAIR website on Jan 7th, 2016. The oral argument occurred on Nov 24, 2015 as scheduled.
It can also be confirmed in by looking at the latest joint Status Report submitted by Google and Netlist on Jan 25th, 2016 for case cv-05718 (Netlist vs. Google involving patent '912).
LRDIMM module makers will not be using Inphi's buffers unless Inphi gets licensing from Netlist. Anyone who tries would likely face an immediate request for an injunction based on Netlist's '537 and '185 patents. Every day Inphi waits, Montage and IDT's LRDIMM buffer market share solidifies and the more difficult it is for the Inphi CEO to come up with new excuses on why they still haven't shipped their buffers yet. Therefore, it seems unlikely that Inphi would want to go to trial at this point. The real question is whether Netlist wants to settle. Hopefully Samsung is encouraging a settlement as others here suspects.