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

To: Binx Bolling who wrote (13194)	7/21/2000 12:03:55 AM
From: DukeCrow	Read Replies (1) \| Respond to of 60323

Perhaps SanDisk was blindsided, but then again that would also mean that the entire flash industry has been blindsided so SanDisk is no different than the rest. If SanDisk had known about future demand, they would have had to raise the cash necessary for the capacity buildouts back in 1998. We all know the situation back then with the Asian crisis and SanDisk's stock price dropping down to cash value. Could SanDisk have raised the necessary cash in that environment? Would convertible debt offerings have been looked upon kindly by shareholders with profit margins rapidly dropping? And what if SanDisk did raise the cash and started their capacity buildouts, but Asia didn't stabilize? Back in 1998 no one knew the demand curve would spike so quickly. Remember, Asia (esp. Japan) was SanDisk's major market back then. And would a company as small as SanDisk have been able to handle such an ambitious buildout. It would have been a logistical nightmare. SanDisk was a pip-squeak company in 1998. I think that SanDisk took the right steps as soon as it became evident that demand was skyrocketing. Dr. Harari is a conservative CEO and would not take such huge risks which could possibly have set the company back tremendously. Also, the mp3 market was barely even born 5 years ago. The only companies which foresaw such a huge ramp in demand and popularity were Internet startups and college kids (I was one back then). Most major CE manufacturers are just now releasing MP3 players. I think SanDisk was very bold in their development of the MMC, a product which potentially could cannibalize their bread-and-butter CF sales. Back then the only market which seemed to need MMC was the cell phone market. How could one predict demand from markets which didn't even exist? I doubt 90% of the world had even heard of mp3 when the MMC was released. Of course, it all seems so obvious in hindsight. Capacitor shortages are an industry-wide phenomenon, not SanDisk specific. About the only companies not affected are those with the size and scale of Nokia and the like. Even if Dr. Harari had foreseen the shortage, I doubt he could have done anything about it. Again, think back to 1998, and put yourself in Dr. Harari's shoes. Would you have forecasted this kind of growth when everything seemed so bleak? If so, congratulations; you would have been smarter than virtually every CEO of all the semiconductor companies out there. Ali