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

To: limtex who wrote (25937)	5/24/2004 2:30:48 PM
From: Pam	Read Replies (1) \| Respond to of 60323

Limitex, I agree, Eli has been a big proponent of bringing memory prices down for years but what do you mean when you say "much quicker than we thought possible"? I doubt if 20GB flash will be in the sweet-spot in the next two years. We will need more than a crash in flash memory chip prices to see that! As I said, there is no doubt that flash demand will grow rapidly but the issue is whether it can grow more rapidly than the supply or gains from production efficiency? Remember what Eli said- Sandisk will have 40x the bits from same silicon wafer in the next few years, yet their cost will go up only 2-4 times. If they fail to create a huge demand for flash memory, they will have overcapacity. Also, it would be naive to think that you and I can spot these "flash guzzler" applications on the horizon yet the analysts who are paid millions at GS, MS, TWP can't see them? They know this well and it will be wrong to underestimate them. What they don't know is the timing of that demand and the difficulty to run the models. Remember when you run discounted CF models, mistakes made in the near-term CFs can cause a lot of damage to the PV of the firm, provided they are significant (and they are significant as analysts are predicting a near-term peak in eps for semicon co's), than the farther-out CFs. Of course, the farther-out CF's get bigger but then they get discounted also, so there is more room for error for the further-out CFs. I think, they also have a good idea of what kind of supply will come online because of the industry contacts they have. And of course, if you believe in "conspiracy theory" you could argue that they are keeping SNDK stock price down so that they can accumulate more of SNDK stock for their clients (vested interest). Having said that, I don't think if there is a whole lot of downside in SNDK unless the mkt on the whole gets ugly. Of course, I could be wrong and make mistakes everyday in my life so don't bet on what I am saying but treat it as just one more opinion. Regards, Pam