Hi Slacker,
IMO, Lexar is going after both Toshiba and Sandisk with their injunction. At the 25 minute mark, Lexar's CFO talks about the injuction going after Toshiba and any partners of Toshiba (specifically mentions Flash Vision).
If that's a possibility, I am not sure it is discounted in Sandisk's current price. If I remember SNDK's last CC, Sanjay Mehrotra made the following statement-
"Turning now to the litigation between Lexar and Toshiba. There has been some recent reporting that has been inaccurate, and frankly defamatory. The reporting suggests that court findings indicate trade secrets were leaked to SanDisk. I want to make clear that SanDisk was not named in this lawsuit and SanDisk never received or used any Lexar trade secrets. As a pioneer in the flash memory industry, our success has been based upon our own innovation, and this innovation has resulted in a vibrant SanDisk IP portfolio, which is generating a growing royalty revenue stream. Also, there have been questions on the possibility of an injunction against our products. We do not believe that there is a legal basis for an injunction against our products and therefore it would be inappropriate for us to make any further statements or take any questions on the case during Q&A."
Wasn't Eli also a witness in this matter? Do we know if he testified?
Perhaps, Sandisk's price cuts on the low-end have less to do with inventory than with going after Lexar. Lexar's current financial situation would seem to mean that they are gambling the company on an injunction. If they dont get one, I would assume that Toshiba's appeal would forestall any payments on the recent reward.
Well, partly that may be true but it is no secret that Sandisk has, in the past, cut prices on low-density products to have the customer migrate to higher density products. They have a huge supply coming online in 2H and have to create the demand so there is no oversupply. Success of Sandisk depends on shortage or Supply/Demand balance. When that scenario changes for more than a couple of Q's this stock will be severely hit. Short-term imbalances have been managed well by giving incentives and moving the inventory but if there is a glut which persists beyond two Q's institutional investors are going to run to the doors fast.
-Pam |
