Wall Street Beat: AMD thrives, Rambus dives

While analysts cheered a comeback Thursday in the tech-strong NASDAQ composite index — pointing to Advanced Micro Devices (AMD) as one of the winners leading the charge — Rambus continued to take punishment from investors for a finding from the U.S. fair trade regulator that the memory chip maker had played anything but fair.

Earlier in the week, Rambus shares were basking in the glow of a positive report and upgrade from BWS Financial. The analyst firm had upgraded Rambus from “hold” to “buy” on the view that the litigious memory maker’s legal environment was improving. After all, Rambus had just agreed to accept a US$133.6 million judgment from Hynix Semiconductor Inc. in a patent infringement case. BWS reasoned that other Rambus targets, such as Micron Technology Inc., might decide to settle rather than fight similar patent claims. Rambus shares gained 13 percent Monday, rising to $17.63, on the strength of the report.

But bad news lay in store. Early Wednesday, the U.S. Fair Trade Commission announced its ruling that Rambus illegally monopolized markets for computer memory technologies by failing to disclose its patents on DRAM (dynamic RAM) memory chip-related technology, while working with a standards-setting organization to create royalty-free or low-royalty standards for DRAM technology. When that technology was incorporated into the standard, and other vendors built compliant products, Rambus sued for patent infringement. The FTC said Rambus deceptively distorted a critical standard-setting process and engaged in what it called an anticompetitive “hold up” of the computer memory industry.

What effect the ruling will have on ongoing patent litigation is unclear. But the effect it had on Rambus shares was obvious: They lost more than a quarter of their value the day the ruling was announced. Rambus shares continued to tumble on Thursday, losing 9.88 percent during the day’s trading to close at $11.40 — a loss of nearly almost a third in value from Tuesday’s close of $16.99.

Meanwhile, AMD’s stock told a happier tale as it led tech stocks up on Thursday, gaining 4.34 percent to close at $20.45, up $0.85. Investors might have bought into the message that the company’s worldwide vice president of sales sold to Reuters — that the company would gain market share more rapidly than planned thanks to its recently announced acquisition of graphics chip specialist ATI Technologies, and that processor prices were stabilizing after a period of bruising competition on that front with rival Intel Corp. Or, investors might have seen IBM’s news on Tuesday that it would expand its range of servers using AMD chips as heralding an upswing for the company.

IBM itself may have been nudged upwards by the same news, reaching its high for the week thus far when it closed at $77.46 Monday, the eve of the widely anticipated announcement. Its stock did not move dramatically on subsequent news, including its acquisitions of Webify Solutions — announced Wednesday — and MRO Software, announced Thursday. It closed Thursday at $76.33, up a penny.

MRO, on the other hand, received a significant bump as investors rewarded it for joining the Big Blue family. It gained $3.86 Thursday to close at $25.46, up 17.87 percent. IBM’s offer of $25.80 per share was a 19 percent premium over its Wednesday closing price.