Israel "the gloebs" on Sndk today: One of the shares I am monitoring at the moment is Sandisk (SNDK). Like < href=http://www.m-sys.com target=new>M-Systems Flash Disk Pioneers (Nasdaq: FLSH), Sandisk manufactures flash discs. In contrast to M-Systems, Sandisk’s disc is portable (M-Systems’ disc is placed on the motherboard and cannot be removed). Sandisk’s products are targeted at the consumer market and if rising demand continues, it is logical to suppose that the company will recover.
Like many others in the market, the company has a serious problem. Its customers (mainly digital camera manufacturers) have large inventories and will therefore not buy additional equipment until they reduce their inventories and consumers demand additional goods.
Another problem facing the company is its entry as a partner into a chip fab. I would prefer the company to be fabless (a company handing over chip manufacturing to a subcontractor, like M-Systems, Zoran (Nasdaq: ZRAN), Galileo Technology (Nasdaq: GALTF), and AudioCodes (Nasdaq: AUDC) ), and concentrate on what it understands best. This is particularly true of a medium size company like Sandisk, and, furthermore, I believe it’s not necessary for them to get involved in the manufacturing side. Nevertheless, I think the share still looks quite interesting.
If the figures continue to show that US consumers are holding their ground, and the company’s inventory level improves, we will consider buying its shares. At $20, the share is quite attractive (the company has $7 in cash per share). |
