Pam, re: near term risks. There are always some risks for stocks. External risks include an economy that is riding on some of the highest debt levels ever, at a time when interest rates are near their lowest levels ever. That's a prescription for a correction.
Risks specifically for SanDisk include a sudden, but still unreported event that could change near term prospects. Do you remember when SanDisk reported its earnings early in order to include the theft of its UMC stock? That was an unusual event and could not be predicted earlier.
Aside from something similar (very low probability), what we should be looking for now is a change in guidance, based on a significant change in sales or new orders in the current quarter. We haven't heard anything, and yet, if there were anything like that, the company would be obligated to report it. That's why I am comfortable with the earlier guidance (on the low side, if anything), and why I think it's strange that a company like SNDK, with very little debt, should be trading at less than 14 times forward looking earnings.
I don't think the short sellers are right or wrong, but when they act in unison, they can create a self fulfilling prophecy.
As to what analysts/portfolio managers really think about SNDK, I can only base my views on those I have contacted or whose views I am familiar with. Among major investment firms, my impression is that a very large and worrisome number of fund managers simply don't worry about technology and spend more time worrying about whether they will do worse in the current reporting period than their colleagues. They tend to be averse to taking any risk, particularly when it means a different investment strategy from their peers.
As to the analysts who publish their views in newsletters and other reports, I am continually amazed by some of the dogs that they hang on to. Just today I got a newsletter from (the name will not be mentioned), assuring investors that the really top technology growth stocks are still AT&T and Nokia! I mean, REALLY!
Art |
