A class action lawsuit has been filed in the United States District Court for the Central District of California on behalf of all persons who purchased or otherwise acquired the common stock of Netlist, Inc. ("Netlist" or the "Company") (NASDAQ: NLST) in connection with its November 30, 2006 Initial Public Offering ("IPO") through April 16, 2007, inclusive (the "Class Period").

The Complaint charges Netlist and certain of the Company's executive officers and directors with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and materially false and misleading statements concerning the Company's business, operations and prospects caused Netlist's stock price to become artificially inflated, inflicting damages on investors. Netlist is a designer and manufacturer of high-performance memory subsystems, which are sold to original equipment manufacturers in the server, high-performance computing, and communications markets. The Complaint alleges that defendants failed to disclose, among other things, that: (1) the Company was experiencing the effects of an over-supplied memory chip market, and demand for the Company's products had deteriorated substantially; (2) due to excessive inventory levels, the Company's two largest customers would be forced to slash their product orders to return to acceptable levels; (3) the Company's profit margins were quickly eroding in the memory chip market; (4) the Company lacked adequate internal controls; and (5) as a result of the foregoing, among other things, the Company's Registration Statement was false and misleading at all relevant times.

On April 16, 2007, Netlist shocked investors when it reported its first quarter 2007 preliminary financial results, which disclosed for the first time that its operating results would be dramatically lower than investors were led to believe, primarily due to an oversupplied dynamic random access memory market, which in turn affected the Company's product pricing and gross margins. Additionally, the Company revealed that it had experienced a lower than expected demand for high-end products from its largest customers, due to excess inventory which had also significantly reduced demand for the Company's products. As a result of this news, shares of the Company's stock declined more than 28 percent, or $1.68 per share, to close on April 17, 2007, at $4.29 per share, on unusually heavy trading volume.

If you are a member of the class, you may, no later than July 27, 2007, request that the Court appoint you as lead plaintiff of the class. Although your ability to share in any recovery is not affected by the decision whether or not to seek appointment as a lead plaintiff, lead plaintiffs can participate in important decisions which could affect the recovery for class members.

If you wish to discuss this action, or have any questions concerning this notice or your rights, please contact us, toll free, at (888) 529-4787 or by email at info.newcases@kmslaw.com.

Kirby McInerney & Squire, LLP has specialized in complex litigation, including securities class actions, for several decades. The firm has repeatedly demonstrated its expertise in this field, and has been recognized by various courts which have appointed the firm to major positions in consolidated and multi-district litigation. The firm's efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling hundreds of millions of dollars, and the firm's achievements and quality of service have been chronicled in numerous published decisions. More information about the firm, class actions in general, or about the role of the lead plaintiffs in a securities class action can be obtained through Kirby McInerney & Squire, LLP's website at http://www.kmslaw.com/.

Website: http://www.kmslaw.com/

But the majority opinion written by Justice Ruth Bader Ginsburg stopped short of the tougher restrictions that many in corporate America had sought and left room for legitimate cases by aggrieved investors to proceed, experts said.

"This was something of a victory for investors in that Justice Ginsburg raised the bar but not that high," said Donald Langevoort, a Georgetown University securities law professor.

Typically, plaintiffs can build much of a case in a suit's evidence-discovery phase. But yesterday's ruling, by setting a higher standard for plaintiffs trying to defeat dismissal motions made by defendants, will make it harder to reach the discovery phase.

The decision was the second one this week by the court that was a defeat for shareholders and a victory for the defendant companies. The justices ruled Monday that securities underwriters on Wall Street are generally immune from civil antitrust lawsuits.

Yesterday's decision was hailed by business groups, particularly high-technology companies, which tend to have volatile stock prices and often face lawsuits when their shares unexpectedly tumble.

"Silicon Valley can breathe a sigh of relief," said Jim Hawley, general counsel of TechNet, an industry association that filed a brief with several other technology groups urging the court to set a high hurdle for shareholder lawsuits.

Several class action attorneys also expressed relief, however, saying the court did not endorse a tougher threshold that would have harmed their legal specialization.

The decision "may cut some of the lawsuits, but it won't make a dramatic difference," said Herbert Milstein, a partner at Cohen, Milstein, Hausfeld & Toll in Washington.

The case had been closely watched because it dealt with issues at the center of the debate over so-called frivolous lawsuits filed against companies on behalf of their shareholders.

Business groups claim that attorneys who represent shareholders launch unfounded lawsuits to pressure companies into paying out settlements. Firms say they indeed often feel compelled to settle to avoid the cost of litigation and the risk of eventually losing in court, even if the plaintiffs' case isn't that strong.

Investor advocates counter that fraud occurs more frequently than businesses suggest, as executives seek to maintain high stock prices and enrich themselves, as occurred in the Enron and WorldCom accounting scandals.

The ruling dealt with a lawsuit filed in 2002 against telecommunications equipment maker Tellabs Inc. by investors claiming that executives had publicly promoted the Naperville, Ill., company's outlook when they knew it was worsening.

The case's fate hinged on the legal interpretation of a law passed by Congress in 1995 to reduce securities lawsuits.

The law said plaintiffs must show a "strong inference" of corporate malfeasance for a case to proceed. But lower courts read that guideline in different ways, with some courts being far more hospitable to securities cases than others.

In the Tellabs case, the 7th U.S. Circuit Court of Appeals in Chicago let the suit stand, saying a "reasonable person" could infer that the company had committed fraud.

The high court had been widely expected to adopt a high threshold. The question was how high.

The ruling, Justice Stephen G. Breyer wrote for the majority, "simply recognizes the real-world circumstance that when the judge's discretionary decision accords with the Commission's view . . . it is probable that the sentence is reasonable."

The court's decision in Rita v. U.S. was the latest in a line of cases that have been redefining criminal sentencing since the court ruled in 2000 that the Constitution requires a jury to prove every fact that a judge might use to increase a defendant's sentence.

In 2005, the court ruled that the federal sentencing guidelines - rules designed to ensure that similar crimes be punished similarly across the country - ran afoul of the jury-trial requirement. But it decided that the remedy was to make the guidelines advisory rather than mandatory, as they had been.

The case the court decided yesterday was meant to help define advisory.

Victor Rita, convicted of perjury and obstruction of justice, asked for a lighter sentence based in part on his past military service. But the judge gave him 33 months, as suggested by the guidelines. The U.S. Court of Appeals for the Fourth Circuit, based in Richmond, Va., upheld the sentence, saying that within-guidelines penalties are "presumptively reasonable."

This pattern has been repeated nationwide since the Supreme Court's 2005 ruling.

In that sense, legal analysts said, the court's decision at least left defendants no worse off than they had been.

In his dissent, Justice David H. Souter said that a presumption of reasonableness for within-guidelines sentences creates "gravitational pull" on judges, moving them toward reliance on the guidelines, and making it unclear what was accomplished by declaring the guidelines advisory in the first place.

But Chief Justice John G. Roberts Jr. and Justices John Paul Stevens, Antonin Scalia, Anthony M. Kennedy, Clarence Thomas, Ruth Bader Ginsburg and Samuel A. Alito Jr. agreed with Breyer, wholly or in part.

In the past, Stevens, Scalia, Thomas and Ginsburg have joined Souter in supporting a strong right to a jury trial on all sentencing factors. But their acquiescence in yesterday's ruling appeared to reflect their belief that the court's 2005 decision was entitled to respect as precedent.