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

To: Ausdauer who wrote (7310)	10/4/1999 8:09:00 PM
From: SBHX	Respond to of 60323

Aus & thread, Obviously after a move like today, anyone would look closely at what has changed before committing any more money here. My original premise to buy SNDK was based upon strong patent position and the attractiveness of the CF form factor for flash memory in digital cameras, wince machines (and perhaps future mp3 players). The decision to sell came after the new issues were announced, since I felt uncomfortable with the continuous dilution every yr or two. The decision to buy around 60 (despite the taiwan quake) was based on a feeling that this was undervalued. The decision to stop buying for a while was based on the rapid drop today. Sometimes, it's good to nibble first. Dollar cost averaging does work.

To: Ausdauer who wrote (7310)	10/4/1999 8:19:00 PM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 60323

Here are some comments directed at those using TA. First, by definition, TA cannot take into account fundamental news, thought it might reflect investor reaction to the news. Second, TA is used so much by so many investors to identify trends (it is a form of trend analysis, after all) that relying on generally accepted support points and other criteria can become a self fulfilling prophecy. Thus, if enough people believe that a support point in the 50's was broken, then they will also seriously consider the stock falling into the 40's, REGARDLESS of the underlying fundamentals. I sense a self fulfilling prophecy is helping make the stock weaker. More important, I believe, is that when a stock has a market capitalization of $1 billion or thereabouts, it becomes an attractive play for active traders: The market cap is still small enough to be influenced by large size trades (e.g., blocks with a value around $.5 million). But there is also a large enough float so that short sellers don't risk being squeezed by lack of shares to borrow. Recall the volatility of an AMEX stock a few years ago - Andrea - which boasted that it had some proprietary noise cancellation products. So one of my conclusions is that short sellers are working hard to create downward momentum on a fundamentally attractive company, hoping to buy back in at a point much lower than where they're selling. A number of institutional investors who missed out on the bargain prices earlier this year may also be interested in this sort of action, enlisting the help of short sellers to get the stock price down to attractive buying levels. Finally, investors should not assume that this kind of trading we are seeing is the result of a "free" market system. Rather, from my own experience over the last 40 years or so, it looks more like concerted attempts to manipulate the stock (attempts often by outside sources with no connection to the company). Investors should not assume that these price swings are free of influence from a variety of sources - not just traders but also people who may have mob connections. There's a lot of stuff going on that regulators, such as the SEC and its tiny staff, never see, or never get enough evidence to even consider pursuing an investigation. In the end, the long term investors are most likely to succeed. Similar downward pressure occurred last March in regard to QUALCOMM. In less than six months, the stock quadrupled. SanDisk has very strong fundamentals, particularly its cash position. I would not doubt at all that the latest acquisition announced today was made possible initially by cash on hand, buttressed by a line of bank credit, to be paid back either by cash from increased earnings or by cash generated from additional sales of shares. I also doubt whether the recent registration of shares, even if some shares made it to the market, was responsible for the recent fall in price. After all the registration was for about 10 percent dilution, and we've seen a lot bigger price drop than that. We really won't know the extent of short selling until figures are released as of the middle of the month. If the earnings statement looks good, as I expect, then it is very likely that the shorts will be squeezed, and the stock will rebound very rapidly on short covering. If the earnings are much weaker than expected, it will raise serious questions about the company management, which has recently assured shareholders that the impact of the earthquakes would not be all that great on the most recent quarter earnings. A surprise on the downside would, I'm sure, generate lawsuits, but I am also sure that SNDK management knows better. One other factor that needs to be considered is Lexar, and whether any of the price volatility was engineered by people working with or associated with those who have major financial interests in Lexar. This is conjecture, but, as I said earlier, I've been an active investor for some 40 years, and all this stuff is not that unusual. Art Bechhoefer