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

To: sdpjf who wrote (26014)	5/31/2004 12:29:08 AM
From: Pam	Respond to of 60323

Hi Peter, Thanks for the summary. I agree, the market for flash is still evolving and hopefully expanding at a rapid pace. Of course, on the way we will have times when supply exceeds demand and that could result in a bumpy ride. I have a lot of respect for Eli. One of the few ceo's that not only has a good grasp of the underlying technology but is also a master of economics that accompanies this business. He knows exactly what he is doing (at least that's my impression after hearing him so many times) and is a passionate believer in it. Of course, the stock is constantly under pressure for the last several months because of the rapid decline in spot prices of flash memory. On Oct 1, 2003 512Mbit and 1Gbit flash chips were at $18.10 and $28.25 respectively and now at $9.60 and $14.90 respectively! When one looks at this decline it is obviously worrisome but not many analysts seem to be paying attention to the rapid decline in production costs also when you move from 130nm technology to 90nm technology. Personally, I am worried that if the growth in demand is not fast enough, growing the dollar revenue becomes harder in face of such huge declines in ASP's (for example, if the bits grow 150% and ASP declines by 40% the revs will grow only 50% from last year) and that may not be viewed very positively by the street even if the margins are maintained by Sandisk. But I remain optimistic for the stock and it reminds me of the days when CSCO, CS and COMS were the key players in telecom gear for the data market and when things slowed down, CSCO maintained its growth at the expense of the other two players (an of course many other smaller players in the business)! I think, if there are bumps on the way, SNDK will maintain its growth in revs, being the lowest cost producer, at the expense of other players in this market. As for the profitability, Eli has tried to explain that it will depend on the ASPs and the cost. He has a good handle on the cost and the other part will be determined by the demand and supply. I think Cruzer could be a huge market near-term and hopefully we see digital camcorders as hot item this Christmas. In the meantime DSC move to higher megapixels and next year we see the camera phone market develop along with Shoot & Store! By the time we get there hopefully we will have other applications in the pipeline! Thanks again for the notes. -Pam