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

To: Dave who wrote (26005)	5/28/2004 12:27:07 PM
From: Steve 667	Read Replies (2) \| Respond to of 60323

Charlie and Dave, This sound very nice academically speaking. Good for cocktail parties and good for getting clients if you are portfolio manager. Half of each days volume is program trading which has nothing to do with "figuring out what the whole company is worth, either in liquidation or as a discounted stream of future cash flow." The compression or expansion (bear and bull) of the market will overwhelm your "figuring out what the whole company is worth, either in liquidation or as a discounted stream of future cash flow." Just look at the period from September 2000 to October 2002. All that "figuring out what the whole company is worth, either in liquidation or as a discounted stream of future cash flow." didn't really matter that much, did it? If your portfolio was long, you lost money. And why? Your portfolio was only worth what the market was willing to pay for it. It was not willing to pay "what the whole company was worth in liquidation" and it was not willing to pay "what the whole company was worth as a discounted stream of future cash flow." Buy the right stock at the wrong time and you can get hammered. However in a bull market, say October 1998 to March 2000, you could use the WSJ and throw darts at the listed stocks and your portfolio would have made money. And then, of course, you would have proclaimed it was because for every company in your portfolio, you "figured out what the whole company was worth, either in liquidation or as a discounted stream of future cash flow." Delusion is a wonderful thing. Regards, Steve

To: Dave who wrote (26005)	5/28/2004 4:11:09 PM
From: Charlie Smith	Read Replies (1) \| Respond to of 60323

Dave, We were speculating on the thread a few months back about the proper "normalized" ROE for SNDK. I maintain that a sustainable (5-to 7-year trend) number of 14% is about as well as they can hope to do. Intel did 4 or 5 points better than this during the 1990s. Difference is proprietary CPU vs. "commodity" flash. I argue that distribution and super smart management is worth a helluva lot to SNDK. Question is: How many ROE points? Skeptics say Micron is a better analog (bad pun) than INTC, and their trend ROE never got much above 10%. As for ROE, current (04, 05) numbers are skewed slightly low by the recent equity offering. Also, I have to agree with whoever said that Hynix, MU et al may have a harder time reaching volume production than expected.