NVE (NASDAQ:NVEC), the company that says it holds key patents for the next generation of MRAM computer memory, is soaring again -- up 16% so far today in the wake of Wednesday's earnings report. MRAM is sometimes referred to as the "Holy Grail" of memory, a technology that would allow your computer to turn on as quickly as your TV. NVE's management is basing its business strategy on expectations of licensing out its patent trove in return for substantial royalties on what some analysts have referred to as a potential $50 billion industry.

However, the second-quarter earnings results were not that impressive. While revenues increased 44% year over year to $4.4 million, and net income more than tripled to $1.2 million over the same time frame, there were zero royalty revenues. Indeed, the company is still generating most of its revenues from product sales, which, as fellow Fool Jack Uldrich mentioned earlier this year, have generally modest expectations.

I, for one, am skeptical of this company. CEO Daniel Baker not only has a checkered past, but also a history of making optimistic forecasts and failing to deliver. Indeed, in a December 2004 interview, Mr. Baker forecast that in five years, MRAM could be a "universal memory," and that it has the potential to revolutionize memory design. Nearly three years later, it is clear that those predictions were far off the mark.

At the time, NVE was pinning its hopes on two licensees, Cypress Semiconductor (NYSE:CY) and Motorola (NYSE:MOT), to deliver the goods by commercializing MRAM products. But Cypress announced in early 2005 that it was exiting the MRAM market, claiming it was not economically viable. Meanwhile, Motorola spun off FreescaleSemiconductor (NYSE:FSL) in 2004, but NVE's license agreement with Motorola did not transfer over to Freescale. It seems like Mr. Baker has been in near-constant discussions with the company ever since, unable to accomplish much of anything -- except press releases.

Coincidentally, Freescale did announce an MRAM product in commercial production earlier this year. Mr. Baker then mentioned Freescale shortly afterwards, when he stated in a conference call that based on a "preliminary analysis that we believe that Freescale's MRAM comes within the scope of claims within a number of NVE patents." The stock more than doubled after that particular call. If investors aren't wising up to the constant promotions, lawyers certainly are. Several class action lawsuits were filed against NVE earlier this year, alleging it made materially false statements regarding MRAM's future potential.

Even if NVE wants to pursue a legal case against Freescale/Motorola, with roughly $13.5 million in cash and investments available, it won't get far before that cash runs out. Rambus (NASDAQ:RMBS), a fellow memory company with a similar royalty-based business strategy, started its legal actions in 2000 with a $130 million cash pile. After spending tens of millions in legal fees, it's still battling it out in the courts six years later.

If you ask this Fool, NVE investors need a dose of reality. Thus far, this company is just spinning you along.

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Fool contributor Stephen Ellis does not own shares of any companies mentioned. You can see his holdings for yourself . The Motley Fool has a free to all disclosure policy .