Shares of Irvine-based Netlist Inc., a maker of specialized memory products that’s in the midst of a turnaround, soared Wednesday after the company said it landed a key design win with computer maker Dell Inc.
Netlist’s shares closed up 20% on a market value of $70 million.
Dell qualified Netlist’s NetVault module—essentially a circuit board loaded with memory chips that helps servers recover lost data after a power failure.
Netlist didn’t give the value of the contract. The win is a notch in the company’s new business strategy.
Earlier, Dell had also selected Netlist’s battery-backed module, NetVault BB, to hold memory data.
Late last year Netlist embarked on a new strategy in which it would shift away from the dead-end business of making commodity memory modules, which are a dime-a-dozen.
Netlist now plans to target a niche by making boards with specialized controller chips that help manage other memory boards within servers.
Wall Street’s been paying more attention to Netlist’s growth possibilities.
The stock is lightly traded and didn’t have any analysts tracking it until a few months ago.
Needham & Co. analyst Rich Kugele started covering Netlist with a “buy” rating and a price target of $3.50 per share.
The company’s stock was trading at around $2.80 per share on Wednesday.
Kugele, who also covers Lake Forest disk drive maker Western Digital Corp. and Santa Ana’s STEC Inc., a maker of flash memory drives, has high hopes for Netlist.
“After years of research and development, Netlist is at a critical junction where its efforts are poised to transform the company into more than just a provider of high-end stacked memory modules,” he said in a research note.
