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

To: NHP who wrote (21368)	12/24/2001 4:18:31 AM
From: Sam	Read Replies (1) \| Respond to of 60323

NHP, << Apparently, SanDisk needed the money quickly. I believe that a secondary offering of 6M+ shares of common stock at $18 or $19 could have accomplished the same thing without incurring interest expense.>> It isn't necessarily the case that Sandisk needed the money quickly, it may be the case that someone approached them, offering them this deal. There have been quite a few large convertible deals--especially private placements--lately (see SLR, just to take one example, or VECO, for another). This could be the result of wealthy individuals or funds wanting to take equity positions that they believe might pay off in the ripeness of time, but wanting to get some cash flow from the positions while they wait. Or it could be they wanted to get a higher return than the 1-2% currently available in money markets, didn't want to take excessive equity risk, and searched for companies that might want to do a convertible deal that would benefit both the company and the investor. Or, a third possibility, it could be that these deals were actually initiated by investment houses wanting to drum up end of the year business (in case you have noticed, there haven't been too many IPO deals in the past few months), and matching up companies who might be able to use funds with wealthy groups who they knew wanted to get a higher return on their funds without taking excessive risk. As for your second comment, if they could have sold 6-8m shares at 18, they probably would have done so. The deal isn't structured like that because the buyer wanted cash flow, not simply stock. Who can blame him/her? I wouldn't mind getting 4% while waiting either. In any case, I wouldn't make the assumption that it was Sandisk that went to the underwriter/investor for this deal, it seems to me at least as plausible that they were approached. The conversion price doesn't bother me so much as the low interest rate offsets it somewhat, and I presume that Sandisk will be able to get a better return on investing the money over the next 5 or 6 years. Sam

To: NHP who wrote (21368)	12/24/2001 10:32:22 AM
From: Art Bechhoefer	Read Replies (3) \| Respond to of 60323

NHP-->>If insiders can purchase a portion of the debentures, it could be interpreted as a positive sign for the direction of the stock.<< The conversion price of $18.43 is so low, comparatively speaking, that insider purchases could not be interpreted as a positive sign. If the conversion price were, say, $25.00, then that would indicate optimism. The convertibles were issued in a private placement. That is, the securities cannot be publicly traded because they weren't registered with the SEC--a process that is somewhat costly and time consuming. Many companies use private placements as a way of minimizing overall costs. The buyers tend to be large funds or institutions looking for a fairly safe way of buying into growth opportunities, at prices that tend to be below what one would pay through the market. It is better for common shareholders if a company issues convertibles, which start out as debt but turn into equity if the stock goes up enough. Initially there is no dilution of the common shares. In this case, the shareholders really don't benefit very much because the conversion price is just slightly higher than what the stock was selling for prior to the announcement. This needs to be seen in context. The stock is down almost 90 percent from its all time high in 2000. To offer convertibles at a price barely above the current level is not helpful to existing shareholders. I was one of those on SI who thought that Kodak should have purchased SanDisk back in 1998, when Kodak spent about the same amount of money to buy the dry x-ray business from Imation. The dry x-ray business has gone nowhere fast, being a specialty product in a mature field. Had Kodak purchased SanDisk, it would have been able to use SNDK flash cards in its digital camera products, and most certainly its marketing prowess would have assured a steadier demand for CF. But Kodak was not, and is not ready to invest in a field that competes with conventional film. Kodak's strategy all along has been to try to make CF and conventional film complementary. For example, they want customers to get prints from their digital images on Kodak photographic paper. Or they want to act as middleman for those who send digital images to friends, or order online photographic copies. Conventional film remains supreme at Kodak, which is why the company is foundering. SanDisk has had no shortage of ideas for making money off a technology that is rapidly becoming commoditized. But the real problem in their establishing retail brands and kiosks and trying to develop an ID system using SD cards seems to be lack of skills in this area. First and foremost, SanDisk has been a designer, not a manufacturer or a retailer. By not pursuing all patent challenges vigorously, SanDisk has jeopardized its proprietary technology. Its most recent series of legal challenges are too small an effort, coming too late to make much of a difference. All in all, this has been a disappointing investment, but the one aspect of the company which still stands out is its relatively low debt (a little higher now with the issue of the convertibles). If they can improve their margins in the coming year (should be possible if the glut in flash cards is finally ended), they might be able to use their positive cash flow from operations to purchase shares of common. Then at least we would see gains in earnings per share. Don't bet on it, however. Art

To: NHP who wrote (21368)	12/30/2001 1:50:29 PM
From: NHP	Read Replies (3) \| Respond to of 60323

CF Cards as IDE Drives Is anyone else out there using their CF cards as IDE hard drives? I've mounted a CF-to-IDE adapter in my PC just under drive A:. In fact, you have to look twice to notice that it is not another floppy drive. Now I have two ways to get information to and from my CF cards; i.e., ImageMate and IDE. I've suggested to SanDisk that they look into producing such an adapter with hardware for mounting it into a 3.5" ported drive bay. Since I received no response, I assume that there is no interest. Too bad, because the .jpg photographs sent to SanDisk show the mounting arrangement along with a spring-loaded door and a prominent red SanDisk logo. I understand that the idea might not be very good from the business perspective, but I do think that some acknowledgment from SanDisk would have been in order. I have not done extensive testing of the CF drive, but it appears to beat the USB ImageMate in speed. This CFHD is automatically detected during bootup, so it doesn't matter what size CF card is in the adapter. Although inserting CF cards is just as easy as inserting 3.5" floppies, the downside is that hot swapping cannot be done, the computer hangs up. I would think that this could be overcome with some circuitry on the adapter, or with a software driver. The adapter, which contains no active components, cost me about $20; the mounting hardware, another $8.00. NHP