rll,
IMHO
People haven't made up their mind about SanDisk yet. I also do not believe you can use
standard methods of valuation in this situation. Earnings may fluctuate wildly, licensing
revenues may stay the same or "bloom" considerably, and the company is a small-cap in
an exciting and burgeoning field. I could envision earnings of over a dollar a share next
year with a PE of 40 to 60.
LICENSING REVENUES ALONE WILL BE $30-32 MILLION IN 1999 ($1.00 to
$1.14/share) AND IT SEEMS UNLIKELY THAT CF and MMC SALES WILL
NOT AT LEAST COVER OPERATING EXPENSES. THEY MAY, IN FACT, BE
PROFITABLE INDIVIDUALLY.
Regarding challengers, I have always envisioned a bunch of execs and some engineers
sitting at a round table with a collection of memory devices in the center. Within the
circle is the Miniature Card, the Memory Stick, a CompactFlash card, a Smart Media
card, an Iomega Clik! and a floppy disc. Each device is accompanied by a spec sheet. Then each item is
picked up, examined, sniffed, dipped in a cup of coffee (a latte, actually) and dropped
10 feet onto a cold marble floor. Each member of the panel is allotted 30 seconds to
argue in favor of one of the devices. Let's face it, SmartMedia and CompactFlash have
been chosen only after great scrutiny and foresight on the part of OEM's. And CF is
gaining momentum, not losing it. Late entries in this market are actually some of these
earlier entries that are knocking on the door for a second look over. The only exception
being IBM.
Everyone needs to draw their own conclusions, but I think we will know for certain
when earnings are announced in January.
rll, I think you are conservative and cautious in your analysis. That adds balance to my
fatally optimistic posts. I would caution you that there are only 26 days left for tax-loss
selling, many of which will be spent in shopping malls, airports and at family events.
Also, a lot of people abandoned hope on SNDK in October. Perhaps the entire float
changed hands in the past 3 months (except insider holdings) and institutions now
holding are unlikely to dump.
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