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Stock Analyst Update

Choppy Waters Ahead for Rambus Shareholders

Legal disputes add to litany of reasons to avoid the stock.


Recent lawsuits slapped on Rambus (RMBS) are not a shock to the world, but they confirm the magnitude of uncertainty regarding the firm’s future and bring into question its ability to profit from its memory-chip patents. With Rambus' future now largely in the hands of the courts, the stock is as speculative as it gets, and investors should probably continue to avoid the stock.

The mainstream viability of Rambus' bread-and-butter product--a proprietary design for memory chips called RDRAM (Rambus Dynamic Random Access Memory)--has been in question for a long time. Not only has RDRAM proved hideously expensive relative to competing memory standards, but the memory chips are also about as scarce as Goodyear tires on a Ford Explorer.

Jeremy Lopez does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.