Art,
re: It is altogether likely that one or more analysts determined to publish statments designed to drop the price of the stock, both to make money on its fall and then to reinvest in order to make up for their LACK OF VISION earlier in the year when the shares were more reasonably priced.
Come on. The stock was up 400% in a short period, another double would have made it 800%. SanDisk was priced for a perfect scenario, otherwise why was it trading in the $20's eight months ago. It isn't like flash and digicams and cell phones were invented in the last eight months.
Art, you have to grasp that the flash market is a commodity market. It's not rocket science, the last guy to build a fab buys the most efficient equipment and process, and has the lowest COGS. Once supply and demand are in balance, the guy that is willing to settle for lowest gross margins determines the market price for everybody.
I don't know what is happening wrt supply growth v. demand growth. But the perception is what matters, just like oil futures. The perception is that a lot of powerful manufacturing companies are going to be producing flash or more flash next year. SanDisk was priced at current earnings growth performance, based on a shortage market, if that is in question, people/institutions are going to sell.
As you have pointed out many times, SanDisk does have competitive advantages; their royalties, their management, and their presence in retail. But they are not in any way immune to the market and gross margins drive everything.
If the smart money is wrong, and demand grows faster than capacity, then there is or will be a hell of an opportunity with this stock. I just don't know how you determine that until the money flow reverses.
It's not the analysts, it's the collective wisdom of the market. It's seldom wrong.
John |
