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Technology Stocks : WDC/Sandisk Corporation
WDC 266.32+6.4%11:43 AM EST
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To: Steve 667 who wrote (24845)2/4/2004 9:45:52 AM
From: Dave  Read Replies (1) of 60323
 
Steve:

RE: Dell

Dell and other companies such as Southwest Airlines in fiercely competitive industries produced above average profits and returns because their "strategy" differentiated themselves over the competition.

Dell's strategy of selling directly to consumers and implementing a Build to order model allowed Dell to not carry much inventory and not worry about product in the sales channel. Other PC manufacturers at that time such as Compaq, HP, Packard Bell, AST Research, etc. relied on retail store fronts and had alot of inventory tied up in computer parts which depreciate very rapidly. Dell used it's tremendous buying power to ensure adequate supply and over the past couple of years even Intel supplies Dell on a day by day basis

So, the question I pose to you:

What is it that SanDisk is doing now that it's competitors are not doing, yet?

The answer to this question should lead you to the answer regarding the sustainablity of SNDK's ROE.

RE: Samsung

Samsung could've learned from it's mistakes. Additional supply is coming on-line from new entrants. These new entrants will charge a lower price since selling their product at the lower price will help increase their returns. As supply continues to come on-line and, eventually, outstrips demand. Samsung will be faced with a difficult decision: Will they sell their flash at their marginal cost thereby lowering prices or will they continue and possibly run the plant at less than optimum capcity?
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