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Rambus Rises on Rumor

Rambus (RMBS) shares jumped almost 20% Thursday as an acquisition rumor sprouted around the company and its beaten-down stock.

"My independent research has been unable to verify any substance to such an event," says analyst Mike Cohen, who is director of research at Pacific American Securities and who owns the stock.

Rambus shares rose 18% to $12.16 Thursday on heavy volume of almost 10 million shares.

Shares have been on a downward trajectory since early June when they traded around $16. The decline began when Rambus launched a patent-infringement suit against Samsung Electronics, the world's largest memory-chip maker and previously a significant Rambus customer.

The oft-litigious Rambus is a designer of semiconductor memory and interconnect technologies that it licenses to chip companies. The company is involved in several legal battles with large memory manufacturers, including Micron Technology (MU) and Hynix Semiconductor.

Rambus, which settled a case earlier this year with Infineon Technologies (IFX), is also in the midst of a suit with the Federal Trade Commission, and it has launched its own antitrust suit against memory-chip makers.

The accelerated drop in Rambus' stock during the past two months was spurred, according to Cohen, by investor fears regarding upcoming court hearings in San Jose District Court pertaining to its case with Hynix. Those hearings are slated to begin Oct. 17.

Also, a ruling is expected shortly out of a Virginia court regarding Samsung's case against Rambus involving a requested change of venue.

Cohen says the latest swing in the stock is just another indication of the volatility associated with Rambus, which has been wrapped up in legal battles for years with potentially billions of dollars at stake.

"It's worth either $5 or $90," he says, adding that the varied valuations are based on whether or not someone expects Rambus to ultimately win its legal cases.

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