Greg,
"From the SSB report...this is a little closer to home."
Message 13996618
I will be so bold to say that none of the information you extracted from the SSB report regarding SSTI is relevant to SanDisk. This information doesn't strike anywhere near home for me based on my understanding of SanDisk's current business. In fact, rather than worrying me I find the information you posted reassuring.
Although I think the comparison is a natural one given the attributes of the companies (both small, both fabless, both making flash, both competing against industry giants), the analogy is not accurate given the product lines.
Finally, as far as flash cards are concerned, cell phones are not currently in the stages of a "tornado" for SanDisk (or any other flash card manufacturer) like the digital camera and MP3/Internet player markets currently represent.
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I feel somewhat vindicated from my musings in an earlier post today before market open. Thanks to whoever posted the following...
"Semiconductor stocks took it on the chin Wednesday after a Salomon Smith Barney report hinted that the best was behind the sector. However, other analysts found the conclusion a bit on the premature side. Salomon Smith Barney analyst Jonathan Joseph cut his ratings on Advanced Micro Devices Inc. {AMD}, National Semiconductor Corp. {NSM}, Texas Instruments Inc. {TXN} and Silicon Storage Technology Inc. {SSTI}. AMD (a microprocessor maker and Intel Corp. {INTC} rival) and TI were lowered to "outperform" from "buy" and SSTI was dropped to "neutral" from "buy."
response: No mention here at all about SNDK. The art of stock picking rises above sweeping generalizations.
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"The evidence isn't there, say analysts. '[Joseph is]...making a broad-based technical call, based upon weak fundamental evidence,' says Karl Motey, who covers SSTI as managing director at C.E. Unterberg Towbin. Motey has a 'strong buy' rating and 12-month price target at $125 on SSTI."
response: SanDisk fundamentals have never been stronger and technicals have never been weaker.
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"Here's the rundown on Joseph's report: The Salomon Smith Barney analyst cut TXN because of its valuation and on worries that its exposure to cell phones as sales of handsets slow. AMD and NSM were cut because of their exposure to the flash memory market, chips used in hand-held devices and cell phones to store data when the power is turned off. Silicon Storage is a victim of its own success, passing Joseph's $105 price target, and for its exposure to the flash market."
response: SanDisk's business does not currently depend on cell phone sales at all. This misconception has created yet another buying opportunity for those who are patient, risk-tolerant and possess an intermediate to long-term horizon on their investments.
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"Being Early and Being Wrong:
"In a market where analysts move in groups, Joseph seems to be standing alone, with his colleagues calling his report's conclusions 'ridiculous' and 'insane'."
response: I feel a bit less ridiculous and a bit less insane.
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"Though a slowdown in the group may take six to nine months, we see 'first mover' evidence of a trend reversal," says Joseph in the report, who expressed concern about inventories rising and capital spending decreasing in the sector."
response: SanDisk has no inventory and is increasing capital spending.
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To be quite frank, I find the continued comparisons with SSTI to be tiresome and overdone. I still interpret these companies to be moving in parallel or slightly divergent trajectories, but in totally different planes. We can continue to argue similarities, but I would think that the SanDisk people at times feel slighted or even insulted by the continued comparisons. SSTI is having a banner year. SSTI excels in the market it serves. SSTI does not appear to pose a significant threat to SanDisk currently and the directions the companies are taking suggests that are moving farther and farther apart. Having said that, both appear to be moving forward at an accelerating pace.
I don't doubt that the co-licensing agreement announced in the summer or 1998 had to do with SanDisk using embedded flash applications for their controller in return for the licensing of card level patents by SSTI. Today's c.c. with Tower makes me even more confident in making this statement.
Ausdauer
(feeling just a bit less insular) |
