Hi Pam,
The Smith Barney overall recommendation was on target, but for the wrong reasons. They missed estimates too. I do have a couple of concerns. First, it seems to me that either the drop in prices of flash cards or less than expected sales volume could be explained in part by less consumer disposable income, after paying higher state and local taxes, higher energy costs, and higher health care costs. This could be bad for ALL consumer product companies, especially the chip manufacturers.
Second, in reading the earlier responses to your message, I wonder if Samsung is really selling their products at a profit or if they are engaging in predatory pricing in order to run everyone out of the market. In yesterday's conference call, an analyst brought up the fact that he could buy a Lexar 1 gb card for $47! Eli's answer was that if the card sold for only $47, then Lexar was not making any money on that sale. Of course, we know that Lexar cards are made by Samsung, as the two companies have a long term technology sharing relationship.
Any thoughts?
Art |
