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Technology Stocks : SanDisk Corporation

SNDK 175.49

-0.6%

Oct 28 3:59 PM EDT

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To: sndk_longterm who wrote (24)	9/13/2010 10:04:23 AM
From: Ausdauer	Read Replies (1) of 36

Long-term...your last post reads like it fell out of a fortune cookie. Nobody has quite figured out the driving force behind the stock tanking, but many assume it has to do with SPOT pricing. I think there is too much attention paid to the SPOT market. Okay, granted that it has some relationship to the health of the supply-demand balance, yet it is not a market that SanDisk sells to. They sell more in a CONTRACT pricing environment which is harder to quote (even though there are those who track NAND contract pricing). Judy Bruner says that SPOT sales constitute only a small fraction of NAND transactions globally. My own research indicates that a good portion of the MLC sold there is several generations old and that has made it easier for module makers to incorporate MLC into various apps using generic controllers. Much of the older MLC is drying up after the closing of 200 mm wafer-based fabs, so prices rise. At the same time unsold (substandard?, non-contracted?) TLC which is left over at some foundries (NOT SNDK) finds its way to SPOT where it cannot be easily implemented due to the complexity of the controllers (Yoram Cedar has touched on this). The result is stable MLC pricing, diving TLC pricing. And since SNDK has converted much of its production from MLC to TLC most believe that SNDK stands the most to lose. The shares plummet as a result. I am not sure TLC SPOT pricing reflects the margins SNDK gets from OEM's. SNDK claims that their TLC pricing is comparable to standard MLC pricing, in which case they are turning a tidy profit. Three of SNDK's most influential (Eli, Sanjay and Judy Bruner) have all said that utilization of TLC has been high, even with OEM customers. The SPOT trends can really spook the market, especially if not interpreted in the correct light. Aus

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