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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (6260)	7/3/1999 7:28:00 AM
From: Sam	Respond to of 60323

Paul, Ordinarily I would agree with you, BUT (you knew that was coming, didn't you?) SNDK isn't just a play on digital cameras. They are also a play on MP3, they are a play on cell phones, they are a play on all portable appliances that will benefit from having non-volatile memory which includes a lot of things that we have thought of. And, as we all have said on this thread numerous times, their patents make them a gate-keeper, and their focus on this market make them potentially the "nimble" player, if their management can keep up. I have to admit that I sold some of the shares that I picked up last fall in single digits a few weeks ago in the mid-30s, before I went on a vacation where I would be out of touch with the market. I did so because I was and still am fearful of general market risk, and wanted to raise some cash, SNDK and a couple of other winners seemed like the best place to do this. Those were the first shares of SNDK that I have sold, having first bought them years ago. So I have aleady been all the way up and down on the previous trip, I know what it feels like, believe me. However, my remaining shares stay unless, perhaps, the stock hits triple digits over the next 6 months, where perhaps I may sell some more. Its potential markets are too large, its patent position too strong, and its management's ambitions too outsized to settle for a "mere" 40x earnings at this stage in its development. The next couple of years will see some explosive growth in revenues and earnings to justify these valuations. Regards, Sam

To: Paul Senior who wrote (6260)	7/3/1999 9:49:00 AM
From: Ausdauer	Read Replies (2) \| Respond to of 60323

Paul, I am not saying that I would buy shares at the current price or recommend a buy to friends or family, just that I think for a long-term player that $46.00 is not an unattractive price. I told my father to try to pick up shares (again) in the low 30's when we were trading in the mid-30's. I am not sure if we will see the low 30's again. If we do, I would also be a buyer. If you realize what Sam has said, the fact that SNDK is the only pureplay in digital cameras and a pretty damn good mp3 pureplay, you can image some "exuberant" investors inflating the stock price to triple digits. If we earn $0.20 this quarter, or something close to that, the estimated earnings for 2000 will be well over $1.00 per share. (I dare say it may be quite a bit higher than that.) Thus, the forward PE is attractive right now at 40. The P-to-B ratio is partially explained by the intellectual properties, the outsourcing of manufacturing and a streamlined work force focused on R&D and some in-house production. Recall that SanDisk could enjoy significant increases in card sales without adding an additional person to the payroll. By 2002 I don't believe that $1 billion dollars in sales with a 30% net profit margin is unrealistic, especially if the Lexar suit is concluded successfully and other intellectual properties are defended successfully. In fact, it may be a gross underestimate. For example, I recently read that sales of mp3 players are project to reach 32 million units by 2002. And this will represent only a single segment of SanDisk's target market. Thus, if my mathematics are correct, $300 million in net revenues could yield earnings of $4.00 to $5.00 per diluted share in 2002. I think we should reassess our thinking in 2 weeks after earnings are reported and Dr. Harari gives us some insight into the remainder of the year and beyond. In the meantime, let's hope for a narrower trading range and a slow, steady march to the top! That is all a SNDK long can ask for. Ausdauer