As the chart shows, SNDK was the standout this quarter with the greatest contribution to earnings of the 24 stocks as well as the exceeding their estimate by the most amount. Of the 7.43 total, SNDK contributed 1.21(16.3%).
Don, IMHO this is not a random occurrence, any more than MU being the "standout" contributor to earnings in the latest week. Memory chip stocks have been given no respect for years now, essentially since the blowout in 2000-2001. But in the past, first Japan, then Korea and then Taiwan targeted memory as an area of special focus, essentially subsidizing over-investment as a part of government policy. Those times are done now, and many bankruptcies and mergers later, we are down to just 3 DRAM companies of any size and 4 NAND companies (counting Toshiba-Sandisk as one here). Despite the PC business being in the doldrums, PC DRAM actually has a healthy supply-demand balance and is now profitable for Micron because so much capacity has either been shuttered or been diverted to mobile DRAM. Mobile DRAM is still seeing tight supply despite that extra capacity because, while high end smartphones are reportedly slowing down from previously unsustainable levels of growth (although still growing at greater than 30% rates!), lower and medium end smartphone rates of growth continue to be torrid. This also drives NAND growth, but the biggest driver this year and for the next 5 years or more will SSDs, both enterprise and client SSDs. They have finally reached a price point where they are affordable by more people than just geeks and first adopters, and even though they are still more expensive than HDs, anyone who wants performance will opt for an SSD as their primary drive. If individuals need more space than 256GB, they can always buy an external HD quite cheaply. Next year, I think we will see enough NAND capacity as well as low enough prices to allow more (perhaps all) PC companies to follow Apple's lead and make SSDs standard in many of their models.
I could go into this at more length, but won't bore you. My bottom line-- Memory stocks like Sandisk and Micron will outperform other chips stocks over the next 3 or 4 years, even though they have already outperformed this year. |
