What the hell are we missing
There only seem to be a few viable scenarios that might explain what's happening with SNDK's stock price.
1)Most charitable to SNDK would be the "unfairly lumped in with the rest of the semi/memory makers" scenario, in which case the stock will certainly recover nicely as earnings continue to ramp, and this is another of those all too frequent great buying opportunities.
2)New products in the wings that will render obsolete SNDKs patents/technology, which as far as I can tell is not the problem at the moment.
3)Or, more difficult to get a grasp on, is that SNDK really is wading into murky waters, that all of the increased capacity is going to ultimately somewhere in the not too distant future result in cascading, cutthroat pricing, a scenario in which a relatively small player like SNDK will get eaten by Samsung, Toshiba etc..
IMO #3 is what Mr. Market must be grappling with. When I try to put my finger on what sort of built in competitive advantage SNDK has vis a vis the "Big Guys" I find it hard to pinpoint anything very specific that will suffice.
Patent royalty alone doesn't seem to be enough to fall back on at this juncture.
Does the JV with Toshiba protect SNDK from Toshiba if Toshiba decides it wants a bigger piece of the market to itself? Or Samsung, can't they just pump up capacity if they want to?
We've read over and over again that FLASH is more specifically differentiated, specialized, than DRAM, and that this differentiation should somehow protect us. But is it so? We all know the end markets served by SNDK are exploding. Anecdodtal evidence seems to indicate digital cameras are selling like wildfire. We haven't even begun to see what happens when Flash slots are added to cellphones. So clearly demand ain't the problem. But bigger markets presumably attract bigger fish, fish who might be running short on food supplies elsewhere. Is the idea that Eli & Co are so nimble that they'll simply be able to outrun the rest?
I don't know about the rest of you but I find it hard to get comfortable with any of the answers I can come up with to these questions,
Dave....a long time lurqer and SNDK shareholder to boot.. |
