Cha2,
I agree with mucho of Mucho's SNDK analysis, but since I had already decided what I would post before I saw this, let me put it up anyway for the record.
The G&K strategy is basically a two-level game. We look for sectors that are undergoing hypergrowth, and for the companies in those sectors that are extremely well positioned to capture obscene profits from that hypergrowth over time. I think most of us agree that flash memory is indeed an area that is or will be undergoing hypergrowth, so the sector analysis is undisputed.
But I still have two reservations at the company level. First, I am still not sure whether Compact Flash will be the only, or the dominant, flash standard over time. There is obviously Sony as competition, and it seems possible that there might be other alternatives down the road. Assurances that the general flash memory market was converging on the CF standard, and that it could not change from that over time, would be welcome.
Second, I am still not sure just what the role of SanDisk is in the CF area. If you could show us that SanDisk was to CF what Qualcomm was to CDMA, then this would become a gorilla game and a lot of us would become a lot more interested. But it seems that SanDisk does not, in fact, get royalties from other CF makers/users (at least at this point). This would make CF a royalty game, rather than a gorilla game. The question then becomes, just what status does SanDisk have at the moment in that game (King, Prince w/ Attitude, or just Prince), and what status is it likely to have in the future when other, bigger players enter down the road.
The basic worry here is that SanDisk, while an interesting and impressive company that is well-placed in a rapidly growing sector, may nevertheless not have the sort of assured future growth prospects and margins that we can find in more primatish or royal companies.
respectfully, as always,
(the originator of the 1-1-1 game deserves no less<GGG>),
bubbleboy/Ares@compactflashisagasgasgas.com |
