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Irvine’s Netlist Raises $14M in Stock Sale, Shares Tumble

Shares of Irvine’s Netlist Inc., a maker of specialized memory products for computers that’s in the midst of reworking its business, slumped Friday after the company said it raised $14 million in a stock sale.

Investors sent the stock down more than 7% in afternoon New York trading on a recent market value of $80 million.

Netlist sold 3,995,000 shares for $3.85 each.

After commissions and other expenses, the company expects to net around $14 million from the sale.

Investors typically don’t like stock offerings because they add more shares to the company’s outstanding stock and dilute profits expressed on a per share basis.

The stock sale is part of Netlist’s new strategy of making memory boards with specialized controller chips that help manage other memory boards within servers.

The company has been wrapped up in several ongoing legal disputes over patents related to the controller chip technology, which in effect “supercharges” memory chips inside a server, making them more efficient.

Netlist has had a rough couple of years since its initial public offering in late 2006, when it raised roughly $35 million.

A massive memory chip slump in 2007 and another in 2008 all but steamrolled Netlist as falling prices of memory chips slashed the value of its stockpiles and squeezed profits.

The new controller chips, for which Netlist holds patents, help boost performance, cut down on power and save on costs for running data storage centers, according to the company.

Netlist still is a tiny player among larger competitors, such as Northern California’s Smart Modular Technologies Inc. and Fountain Valley’s Kingston Technology Co.

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