SNDK Risks:
Aus, one thing first:
I want to sincerely thank you for all of the hours, the efforts, and the hastles that you endure to develop this thread. It is incredible. I have put together 1/1000 info on some threads as you, and I know it is time consuming - and often times - unappreciated by many. I simply want to thank you again.
My concern is the patent portfolio of SNDK, and SSTI - although I know you don't follow SSTI to the same degree. Based upon the article, and your understanding, does SNDK have the patent protection, and alliances in place to withstand the eventual surplus shift, as opposed to the effects of Iomega, Seagate, and Western Digital - as addressed in the link? Is it suffice to say that SNDK will win in the end due to its royalty stream from any surplus in the market? Or does the prospects of a surplus glut pose significant risks to SanDisk?
Thank you - and you are the Oz of SanDisk! (I personally believe the Palm decision will have huge, positive implications for SanDisk). ad
moneycentral.msn.com
"The big risk
Anyone who has invested in storage stocks before knows they can run up fast on enthusiasm over strong demand for new consumer-electronics devices, only to crash hard when a supply glut leads to savage price-cutting. Remember the rise and fall of Seagate Technology (SEG, news, msgs) and Western Digital (WDC, news, msgs) in 1997? If not, do yourself a favor before you plunge into flash memory, and look at the charts. Western Digital started in 1997 around $24, zipped to $54 by August, but ended the year around $16 despite a boom in sales of PCs.
Naturally, given the level of demand, more flash-memory supply is on its way. But analysts say it will fall short of meeting demand at least through part of 2001. They think it might take even longer, given that demand comes from a rich variety of consumer and telecom applications this time, not just the PC sector.
Perhaps the cycle will be different this time. "But in these fast-growing industries, the good times are not perpetual," notes Craven. "At some point, supply catches up with demand." If the durable recall of flash memory inspires you to remember this fundamental rule of economics, your portfolio should benefit in more ways than one."
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