Don, though I do not use technical analysis very much, it seems to me that SNDK is in a situation similar to QUALCOMM in February and early March, 1999, just prior to a stellar earnings statement and a patent lawsuit settlement with Ericsson, that ultimately made QCOM the best performing stock in the entire S&P 500. As you note, the inclusion of SNDK in the ML list shows the beginnings of some institutional interest. What impresses me at this point is not only the strong increase in unit sales but your more recent note indicating that SNDK is also providing chip sets for embedded applications.
This latest press release says a lot. First, it says that SNDK is looking at markets other than compact flash and multimedia cards, which have specific physical formats and proprietary technology dealing not only with the electronics but the physical design as well. Embedded flash memory is an area that I expected would fall largely under the influence of companies such as Advanced Micro Devices. Now we know that SNDK is not about to relinquish this sector of the market.
Second, the very fact that SNDK has agreed to supply chipsets to JUMPtec indicates that the Taiwan Semiconductor deal has led to very substantial increases in capacity for producing chipsets. Late last year, SNDK was selling everything it could produce in its factories in Taiwan and China. They could have sold more if they had the capacity. Now there is more capacity, and by early next year, the plant in Manassas, Virginia, owned jointly with Toshiba, will start producing.
I don't know if Merrill Lynch understands, or even notes the significance of these developments, but what they suggest to me is that the current price around 90 will not stay there for long, even if the overall market for tech stocks is weaker than it was last year.
Art |
