Netlist: Buy, Sell or Hold?

In a world full of change, very few trends can be counted on to continue.� One trend that has almost guaranteed odds of continuing is the need for computer data storage and memory.� As computers grow faster and become more intertwined with all aspects of life, the need to store the data and ramp up memory capability will expand exponentially. This creates opportunity for small, nimble, creative companies who can ride this trend into the future.� One of these memory companies is Netlist (Nasdaq: NLST).� The company�s stock price has been beat down lately, opening up great opportunities for savvy investors.

Founded in 2000, Netlist designs and manufactures high-performance, logic-based memory subsystems for data center server and high-performance computing and communications markets. Netlist’s leading products include HyperCloud Memory and NVvault, a flash memory-based subsystem that enables data retention weeks following a disaster. The memory technologies are developed for applications in which high-speed, high-capacity memory, enhanced functionality, small form factor and heat dissipation are key requirements. These applications include tower-servers, rack-mounted servers, blade servers, high-performance computing clusters, engineering workstations and telecommunication equipment. �The company has its headquarters in Irvine, Calif., with manufacturing facilities in Suzhou, China.

The company just posted bang-up positive fourth-quarter and yearly results.� Year-over-year revenues were up 51% with fourth-quarter revenues surging 105%.� Gross profit increased by 94% year-over-year and an astounding 230% in the fourth quarter.� However, despite the improvement, net losses increased to $15.1 million from $12.9 million last year.� Netlist attributes the amplified loss to higher engineering, sales and marketing costs.� CEO C.K. Hong stated positively, “We are very encouraged with the progress during the fourth quarter and the year and anticipate continued growth in 2011, especially as challenges in memory capacity and performance continue to emerge across industry segments.�

Technically, price is below both the 50 and 200-day simple moving averages with slight support existing at the $2.15 per share level and strong support at $2.09.� Upside resistance exists at $2.45 and $2.65 per share.