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

To: Pam who wrote (26217)	6/26/2004 6:05:55 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 60323

Pam, re: near term risks. There are always some risks for stocks. External risks include an economy that is riding on some of the highest debt levels ever, at a time when interest rates are near their lowest levels ever. That's a prescription for a correction. Risks specifically for SanDisk include a sudden, but still unreported event that could change near term prospects. Do you remember when SanDisk reported its earnings early in order to include the theft of its UMC stock? That was an unusual event and could not be predicted earlier. Aside from something similar (very low probability), what we should be looking for now is a change in guidance, based on a significant change in sales or new orders in the current quarter. We haven't heard anything, and yet, if there were anything like that, the company would be obligated to report it. That's why I am comfortable with the earlier guidance (on the low side, if anything), and why I think it's strange that a company like SNDK, with very little debt, should be trading at less than 14 times forward looking earnings. I don't think the short sellers are right or wrong, but when they act in unison, they can create a self fulfilling prophecy. As to what analysts/portfolio managers really think about SNDK, I can only base my views on those I have contacted or whose views I am familiar with. Among major investment firms, my impression is that a very large and worrisome number of fund managers simply don't worry about technology and spend more time worrying about whether they will do worse in the current reporting period than their colleagues. They tend to be averse to taking any risk, particularly when it means a different investment strategy from their peers. As to the analysts who publish their views in newsletters and other reports, I am continually amazed by some of the dogs that they hang on to. Just today I got a newsletter from (the name will not be mentioned), assuring investors that the really top technology growth stocks are still AT&T and Nokia! I mean, REALLY! Art

To: Pam who wrote (26217)	6/26/2004 9:32:19 PM
From: Robert Douglas	Read Replies (1) \| Respond to of 60323

Let me ask you something, do you perceive any risks to Sandisk at all in the near-term? Pam, the near term is almost impossible to predict. Why spend so much time trying to do so? As a good economist, I can quote you from our bible. "Prices are determined at the margin." For flash prices that means that if you have 5% excess capacity, prices will drop significantly. If there's 5% capacity shortage, then you get the reverse. I don't care how much time you spend going over the numbers, you'll never be able to forecast supply and demand within this tight a range. Why try? Yes, it will move SNDK shares in the short term but this doesn't really matter to someone who's in it for the long haul. What I CAN predict with much greater confidence is that demand for Sandisk's products will grow significantly in the next 3-5 years. This market will be many times as large in the future. If you believe Sandisk is the market leader, you can't help but think that the stock price will one day be many times the current level.

To: Pam who wrote (26217)	6/27/2004 10:05:52 AM
From: Dave	Respond to of 60323

Pam, You said it better than me. RE: Some of it could even be hedged against the shares they will get from convertible bond issue, who knows? In order to prove or disprove this hypothesis, I would find out when the conv't was sold and compare the short interest then. The conv't pf'd was issued sometime in the timeframe of 2002 up to May-June 2003. As of July 2003, short interest was ~23m shares. It is now 31m shares. A portion of the shares short is, most likely, due to the conv't pf'd. Typically, institutions when offered a conv't preferred, buy the conv't and short the common. Therefore, the institution essentially "locks in" their return (read: Dividend). If the common stock moves against them (read: UP), the institution covers at the conversion price of the conv't preferred.