WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 241.92

+8.5%

3:59 PM EST

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To: Art Bechhoefer who wrote (24131)	12/8/2003 7:24:15 AM
From: Road Walker	Read Replies (1) of 60323

Art, re: The question is whether the decision to expand now, at a cost of more than $1.8 billion (shared with Toshiba) is reasonable. Many analysts think it isn't. I think it is. I agree with you. My caution is driven by valuation and information we don't know. While the lead time for a building a fab is a supply constraint factor, many, including Samsung are talking about switching lines from RAM to flash. I'm not sure what the lead time is for that. Infineon is getting into the business. Everything you read is about folks racing towards capacity. Sandisk is selling at ~50x trailing, I think ~28x estimates. Probably not unreasonable if everything stays the same wrt earnings. But if additional capacity were to come on line, and demand growth were to stall, even on a seasonal basis, then those estimates could come down. And (I think) SanDisk is priced for a perfect scenario. There are smart folks out there with access to supply demand data that we simply don't have. And SNDK certainly demonstrated that someone is selling heavy volume(SNDK v. SMH - finance.yahoo.com ). So that could be the signal to stay clear for the time being. Hell, I don't know. I'm just sounding a note of caution. MHO is that SanDisk is a very good company in a good position in a good market. But I think you will be able to buy it cheaper. I've got a track record of being both right and wrong. John

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