WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 168.90

+4.9%

Dec 5 3:59 PM EST

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To: Craig Freeman who wrote (21021)	10/22/2001 5:50:50 PM
From: Art Bechhoefer	Read Replies (1) of 60323

Is SanDisk trustworthy? Did they mislead shareholders on the uniqueness of the patents? It's easy to blame management for anything and everything when stock prices drop (and just as easy to congratulate them when prices go up), but many of the factors determining stock prices are totally beyond a company's control. At one time, perhaps about three years ago, SanDisk had proprietary technology that was more crucial to its products than now. The reason isn't necessarily that the company misled shareholders, but rather that the pace of innovation was so fast that older patents became less critical in the design of flash memory units. When investing in proprietary technology, the risk is that someone else discovers a different proprietary technology and achieves the same result. Think back to the days of the earliest IBM PC models. It took about a year for companies like Compaq to figure out a way to design a PC that didn't depend on IBM technology. As the flash memory industry becomes more commoditized, and as SanDisk realizes that this is the case, it has done just about the only thing one can do to survive: Cut production costs to remain competitive and include enough value added features to differentiate SanDisk products from the rest. People can argue whether SanDisk did everything it should have, but I think they made most of the right moves at the right time. Finally, one thing that distinguishes SanDisk from other companies involved in removable flash memory, is its sound financial condition. If you compare SNDK and LEXR and look at data such as the ratio of stock price to book value, the only conclusion is that the price of LEXR is still irrationally high compared with SNDK. That's not the fault of SanDisk but of a sufficiently large number of investors who cannot distinguish between healthy companies and basket cases. Art Bechhoefer

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