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

To: Craig Freeman who wrote (6623)	8/15/1999 10:35:00 AM
From: Sam	Read Replies (1) \| Respond to of 60323

Craig, Art, << you really have to wonder how we went from $5 to >$80 and why ... BEFORE you place any bets.>> I agree. I think we can agree that single digits for this stock was inane, it never "should" have been there. Even so, a move from, say, 15 to 88 is a pretty hefty one. I sold some stock possibly at about the time you sold your call, Craig (back at the end of May or so, I think). Even though I "lost" a lost of money doing it, I still think it was the right thing to do at the time. And it is the right thing, for me at least, to hold now in high 80s (though I did say back when it was in the 50s that if it went to triple digits, I would sell some more). So what changed? Well, first of all, I have at least three new pieces of information from the past month or so. First, that MP3 demand is much stronger than I gave it credit for, and it looks like it may well be a big winner. Second (although I can't say that I entirely understand this), it seems that flash chips are supply constrained. This is extremely important, because it means that no one can flood the market for at least awhile, and it puts limits in declining ASPs that might not be there otherwise. And CF and MMC's many design-ins give it a distinct advantage in that kind of environment, I think, as long, of course, as they can get their supplies at a reasonable cost and get whatever kinks they may have in their MMC production process worked out. The latter are engineering problems that I think more probably than not can be worked out. The former is probably more of a wild card, but I'm guessing (hoping?) that they will work this out as well. Third, in looking at their last report, it seems to me that they have a good shot at triple digit increases in revenues coming up. And I think that that might last for awhile, at least a year and possibly longer than that depending on how things work out in the flash market. Cameras, cell phones and MP3, as we have said on this thread many times, will all be megamarkets, and they are all coming into their own now. Flash and (we all hope) SNDK will be an important part of each one, as well as other portable electronics devices. A former poster named Michael Woodward wrote a long time ago (for those who have been on this thread for a couple of years) that Eli H. told him that he wanted to build a major company. Well, I think that this is possible. A major company in flash will get, in the ripeness of time, a market value far in excess of $2 billion, indeed at least 10x that, I believe, as long as their patent position remains secure and they can keep CF and MMC in central positions. I'll be happy and patient enough to wait for that, and let this money compound without paying any taxes on it or guessing when to sell to avoid the downturns and when to buyback to get in on the upturns. Makes life easier. What else has changed? Well, my own personal position. I sold stock in SNDK and a few other stocks at about the same time because the general market was making me nervous, they had all gone up a fair bit, and I wanted both to take some profits and to raise some cash in case the market took a dive. I raised enough cash to make me comfortable, and am willing to let the rest of my SNDK ride. If I ride it back to 30, as Craig's broker (and others) have suggested, well, it won't be pretty but it won't be the end of the world. If Eli is successful in his ambitions, it'll be back plus more eventually. All my opinion and circumstances only. Sam

To: Craig Freeman who wrote (6623)	8/15/1999 6:26:00 PM
From: Art Bechhoefer	Respond to of 60323

A $30 stock? He's dead wrong! Just the fundamentals themselves justify more than double that price. The question, as you note, remains whether SNDK is getting into a range that may be greater than its intrinsic value. Before I would sell, as I noted earlier, or even consider selling a covered call, I would need to be convinced that there is a fundamental change in the valuation of the stock that is not consistent with its record of growth and sound management. So far, the opportunity to sell has not really been there, so in a way, the discussion remains academic. The reason I proposed the strategy is that every investor needs to have an appreciation for the alternatives, and how those alternatives would benefit or interfere with his/her investment goals.