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

To: Dave who wrote (24633)	1/22/2004 10:09:09 AM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 60323

Dave, you pointed out: "The "pessimism" in this report can be, IMO, attributed to two things: 1. The drop in GMs 2. Questions/uncertainty regarding SNDK's brand awareness strategy and whether it can pay off. Your comments are very interesting, particularly in the way that patents might be factored into the operating earnings by increasing gross margins. Thus, a drop in gross margins might signify something ominous about to happen. The guidance on lower gross margins, however, seems to be due in part to costs associated with the new plant and the shift to thinner "wires" on the chips. If that is true, then the 40 percent drop in flash prices does not signify pricing pressure but simply is another example of Moore's Law. As to brand awareness, I'm no marketing expert, and I have no idea whether consumers have any brand awareness on flash memory. But I do know that retailers have brand awareness in the sense that they want to have confidence in a steady supply to meet their needs. I think that is more important than the brand name, as what we really want to see is plenty of SanDisk cards at typical outlets, such as WalMart, Best Buy, Staples, etc. In one of my recent posts, I set forth several different measurements that would allow investors to determine if the price is reasonable, including price/sales ratio, price/book value, change in price/book value over time, long term debt, and cash per share. I look at all these measurements as a guideline but not an absolute. Thus, I do not establish arbitrary limits on these measurements as a guide for buying or selling. I also compare these measurements with other stocks in the same sector. Only then can I determine if the current price makes sense. Art