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

To: limtex who wrote (24080)	12/5/2003 4:34:54 PM
From: Art Bechhoefer	Read Replies (3) \| Respond to of 60323

L--Many reasons why the stock could have dropped 20 percent so suddenly. Among them: Recent bailing out of dishonest mutual funds by upset shareholders could have forced the funds holding SanDisk to sell off stock to raise cash to honor redemptions. Another factor is increasing caution over the whole technology sector, expressed by analysts who think other areas that haven't had much of a rise, like drugs, are better investments. Then there is the question of SanDisk as a new NASDAQ index component. A weakness in semiconductors, brought on by the recent Intel announcement, is forcing down the entire technology/seminconductor group, regardless of the fortunes of individual companies. On top of this is the huge volume, which suggests that short sellers are at work. If so, there will come a time when short sellers decide to cover, and less stock will then be available for purchase. Put all these together and you can see how it would be possible (but in more ordinary times unlikely) that a stock could lose 20 percent of its market value that suddenly. SNDK is probably now in a buy range because the latest news (that came out after the most recent earnings) shows that demand for flash memory is much greater than previously anticipated, especially for camera phones. The issue of NAND vs. NOR is also interesting because, as some have noted here, there is confusion about demand for each type of flash card. There may well be a glut of NOR cards still on the market, created in part by manufacturers who have not yet tooled up for NAND or learned how to do it. There appears to be no excess capacity or excess supply of NAND cards, and no pressure on prices despite the additional NAND capacity planned or coming on stream. As usual, the analysts who don't really bother that much with the technology details have got the details wrong. They may eventually find out, but meanwhile, SNDK shares could fluctuate in the mid to high 60s. Eventually some large institutional investor is going to figure out that there aren't many companies in a fast expanding market like this, and even fewer companies with positive cash flow and virtually no debt. But as I said earlier, there seems to be less interest in the quality of company finances than in rumors about what might happen, without any consideration of the nitty gritty details about what the companies are actually doing. Art