Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Craig Freeman who wrote (19820)	3/26/2001 12:35:09 AM
From: Craig Freeman	Read Replies (1) \| Respond to of 60323

On-topic, good news! To my knowledge, "Tiger Direct" was the first mailorder vendor to support Lexar Media. Famed for offering "deals", for many years Tiger has offered the lowest cost on everything from dirt to PCs. For example, their latest catalog features "audio" CDs for $0.67 each -- despite the fact that there is a $1.00 per CD royalty due on all audio CDs. Tiger is currently having a "sale" offering both 4x and 8x Lexar media 64MB CF chips for $119. They are also offering PNY CF at $125 for a 64MB CF card. Despite their "discount attitude" over the past several months, the retail price for a CF card at Tiger .... hasn't changed. IF the flash marketplace was undergoing an inventory crisis, you would have seen it first at Tiger. IF there was an excess in supply, Tiger would be offering $100 CF cards with $80 rebate coupons. But no. Prices on CF at retail have held solid. I don't have a clue why SNDK isn't shipping more cards to BestBuy. And I haven't a clue why the stock is down so much for the year. What I do know is that retail prices are holding and that store stocks of SNDK products are almost zero. Perhaps SNKD's suppliers have not delivered. Perhaps the Toshiba deal is worth several times what we thought. Perhaps SNDK is so busy issuing options to its officers that it forgot to send supplies to its customers. I don't know what I can't know. But what I do know is that that -- today -- there are fewer CF chips in the channel than ever before. And if SNDK could deliver CF chips, they would be able to sell them profitably. Craig

To: Craig Freeman who wrote (19820)	3/26/2001 10:55:01 AM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 60323

Craig, in regard to why Clinton predicted good news for the bond market some 8 years ago, remember that Clinton was getting advice from Rubin, who became one of the greatest, if not the greatest Secretary of the Treasury. Rubin and many others who were involved in the financial markets, knew that the lackluster economy in 1992 would eventually motivate the Federal Reserve to reduce interest rates. It is difficult to predict stock prices, but it is almost always true that bond prices go up when interest rates fall. In politics, moreover, one can always find a politician who takes credit for anything good that happens. No one has ever doubted that Clinton had a tremendous talent in that regard, irrespective of what they may think of his other attributes. As to why the semiconductor stocks as a group, including SNDK, have done so poorly over the last year, one should look at interest rates, factors influencing consumer confidence, as well as world economic and political conditions. Greenspan used "irrational exuberance" almost as an excuse for raising interest rates at a time when inflation was low and not increasing, but also at a time when he thought stocks were too high. As I have said countless times, Greenspan used the wrong tool to correct what he believed to be excesses in the stock market. You don't use interest rates, as that simply hog-ties the whole economy. Instead you increase margin requirements on stock purchases, forcing many investors to pull back a little. Such a prudent use of margin requirements (which are set by the Fed) would have helped push down what Greenspan thought were too high prices for stocks, without distorting the whole economy. Recall that Greenspan was still raising interest rates about six months ago, and it is well settled that the effect of interest rate changes takes about six months to work its way through the economy. Why the Fed refused to alter margin rates and instead concentrated on interest rates probably reflects the bankers' fear that of all the sins of the world, inflation is the worst. Myopia, if you ask me. Meanwhile, higher energy prices were competing for consumer dollars, forcing consumers to spend more on the essentials and less on the items such as computers and semiconductors which had driven the economy to new heights. The Fed ignored the changes in consumer buying habits and chose instead to regard higher energy prices as one more indicator of impending inflation. If one is looking for government actions to reverse the downturn, there are two possible policies to stimulate the economy IMMEDIATELY. A tax cut is one, but the across-the-board cuts favored by the Administration are truly inefficient and would have very little effect in the first year. If they really wanted to stimulate the economy through tax cuts, they would IMMEDIATELY cut the corporate income tax rate by at least 50 percent. This would either lower the price of products and services, since less taxes would be paid, increase profits and spur future investment, or discourage marginal investments, since the subsidy created by deductions from taxable corporate income would be much less. Thus, a corporate tax rate cut would both stimulate the economy AND be non-inflationary. Guess how many in Congress would go for such a policy. Many of us have some gripes about SNDK, in terms of whether it has any proprietary products, or even if it doesn't, why it is faced with inventory build-ups at a time when retail stores are in short supply of CF. But one area where SNDK stands out is its positive cash flow, and the fact that unlike many other rapidly expanding technology firms, it doesn't have to issue more stock or borrow more in order to finance its capital needs. Even though interest rates are coming down, not having to pay ANY extra interest gives a company a decided advantage over its competitors. Just look at the difference between SNDK and LEXR, as an example. With interest rates coming down, and with a tax cut in the offing (even if it won't be very effective), one can be sure that an experienced politician like W will take the cue from Clinton and take credit for the return to prosperity that will very likely take place slightly after the tax cut is passed, though not BECAUSE of the cut. As I say, it is almost routine that politicians will find a way to take credit for anything good that happens. And the public will believe!