SSTI - Eric's comments:
Thanks Eric!
Some highlights from the earnings announcement.
Net revenues grew 66% Q1 over Q2!
Net revenues grew 349% from the 2Q a year ago.
Net income grew to $0.71 versus $0.34 sequentially.
The gut feeling I have from comparing an investment in SSTI versus SNDK is how nicely SSTI has diversified its strategic planning. While SNDK's flash card business is important, SSIT has embraced the concept of a fragmentation in it's market and has positioned itself to participate in all the potential 'tornadoes' that the flash memory market may experience. While it appears some on the SNDK thread refuse to recognize the potential impact of technologies such as those represented by BlueTooth and the other markets in which flash will play an important role, I think SSTI will continue to be embraced by the market in form of superior share appreciation because of their "product proliferation strategy".
From the earnings report:
"We believe the flash market will become more and more fragmented, characterized by the coexistence and continued growth of all memory densities and various configurations to meet the specific requirements in each of the emerging broad applications. As a result, we believe our strategy of diversified product offerings and technology licensing for embedded applications not only will maximize our growth potential, but also can minimize our business fluctuations due to the seasonal weakness of any particular application segment."
"During the second quarter, we also continued to execute on our product proliferation strategy by developing more differentiated products to serve targeted applications including future generation cellular phone, wireless modem, Global Positioning System, Bluetooth, Internet Appliance, small disk drive, electronic organizer, smart card and video games. "
This product proliferation strategy is the ticket to leveling out the boom bust cycle of past decades. It is also why the market is rewarding SSTI vs. SNDK in that if one flash card design wins out over the others, a major chunk of your companies future profits are not pegged. Very astute move by SSTI management!
SNDK is investing over 75 million to build one foundry in Israel, which according to the SNDK thread mind-set lessens their risk to market . I disagree. SSTI, by taking a different approach, assumes less risk by remaining fabless yet still securing additional capacity in an already tight market. IF the market loosens up - SSTI won't be stuck with an idle $2B fab! I'd call that superior risk management. (Personally I think SNDK made the investment because it needed the Toshiba technology...but that is another issue!)
More from the report:
"With more than 50 new products introduced since mid-1998 that serve a wide variety of applications, the additional wafer capacity that we expect to bring on line in 2001 and more than 40 new volume purchase and supply agreements that we expect to sign with our customers, we believe SST is well positioned to take advantage of the current industry upturn.
Just my 2cents worth.
Good luck,
Eric
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