Will Rambus Ever Regain Large-Cap Status?

In November 2011, Rambus RMBS lost over 50% of its market value in less than a single trading day, automatically demoting itself from a large-cap stock to a small-cap stock. Rambus lost so much traction because it lost an antitrust case against Hynix, a company that it accused of stealing intellectual property.

On Tuesday, Rambus has increased its revenue guidance, immediately prompting its shares to jump over 7%. While companies' management teams tend to be optimistic, management may have something interesting for investors. When investors take a step back to consider Rambus' case, it is still the same company as it was two months ago when it was trading higher.

The antitrust case would have awarded Rambus about $12 billion had it won the case. However, losing the antitrust case did not damage the company materially, apart from legal costs. Rambus' supply chain is intact, its clients are still buying, and its products are progressing as normal.

Some analysts contend that Rambus' stock is simply acting as such because of market indiscretion. While the court settlement would have benefitted Rambus' balance sheet greatly, it would not have improved the company's fundamental business model. Therefore, there is no reason for investors to believe that Rambus truly deserves its current stock price over its historical stock price.

Perhaps Rambus will be one of those long-term plays that will greatly benefit those who bought when everyone sold. It could very well regain its large-cap status later in 2012. Only time will tell, but it appears that Rambus' operations are intact and are on track to improve its current situation throughout the year.

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