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

To: Pam who wrote (25362)	3/15/2004 9:14:19 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 60323

Pam--The new facility in Japan is being built ahead of original schedule in order to meet growing demand. I think it's unlikely that Toshiba and SanDisk would have done this if they believed competitors would create a glut. There are two issues here: Growth in demand, and cost of production. It's not clear to me that even the Koreans have a lower cost of production (unless they are getting government subsidies). The same would be true for initial production in China. Remember that chip fabrication is pretty much automated, so differences in labor costs don't have as much impact. If Toshiba and SanDisk find it necessary to invest in a Fab 3, the cost need not be financed by new stock but may very well be financed retained earnings. Not all companies are forced to go to the capital markets every time they expand. Look at QUALCOMM, which is quite unpopular in the investment community precisely because they don't need investment firms to underwrite new equity issues or debt issues but generate all their cash internally--with plenty left over for dividends, etc. Art