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

To: Greg h2o who wrote (11482)	5/25/2000 9:29:00 AM
From: Art Bechhoefer	Respond to of 60323

Greg, I agree that comparing operations in a single quarter is not the only basis for estimating future profits. But other factors might actually strengthen future profits. For example, in a fast growing company, where production is still in its early stages and where costs of bad lots of chips tend to be higher than normal, prior earnings can be affected downward. As production problems are ironed out, and as some research and development expenses are cut, profit margins improve dramatically. Even if growth in unit sales began to drop off a bit, growth in margins would more than compensate. So it is not reckless to project a tripling of earnings and a price-earnings ratio in accord with that growth. The biggest reason for investing in SNDK, however, is not the immediate growth prospects, which are among the best for any technology company, but the quality of management, which has maintained a positive cash flow and has avoided hurting shareholders through earnings dilution from issuing more shares to compensate for lack of capital. The deeper one digs into the innards of the company, the better it looks. Art