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

To: Robert Douglas who wrote (26219)	6/27/2004 11:23:21 AM
From: Pam	Read Replies (1) \| Respond to of 60323

Hi Robert, <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.> I am not trying to predict risks like the UMC shares being stolen and neither am I trying to predict the market risks here. What I have said, is there is a risk that the market for Nand flash memory is slowing relative to supply growth (these last four words are important) in the next couple of quarters and there is a risk some players like Lexar (and for that matter even Kingston's, PNY's, etc. but since they are private we wouldn't get the information on them easily) are going to miss their numbers. The reason, Sandisk can still make the numbers is they are vertically integrated and they can drop prices faster than their competitors and gain marketshare from their peers and make the numbers. If the price elasticity that Eli has seen work in the past doesn't materialize in 60-90 days than Sandisk's performance and earnings will also come down. These are, and I believe, very simple to forsee here if you have been monitoring the news that has been coming out in the last few months. It hardly seems impossible and I hardly see a waste of time! I DO NOT have to forecast demand and supply accurately (in a tight range) to benefit from it. <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.> Its easy for one to say- Why try? But if I could have figured this stock is headed down 50% I would want to get out and profit from it even if I am longer-term bull on the stock. And one didn't have to get out at the top either. You could have sold at 35 and bought back at 25 and yet could have done better than leaving the long position alone. Of course, in hindsight its all 20/20. But a little bit of quick analysis from my side should have worked for me to benefit from this. In any case, if you have read my post carefully (see below), I have already said that I hope to make money if I held my shares for the next 1-2 years especially from these price levels. <From: 26217: Don't get me wrong, I remain optimistic about this company and still holding long (even though at a slight loss) but I do see the risks that I have talked about. But I also know that I have already taken most of the beating and if I can hold it for the next year or two, I will still make a good return on it from this price level. As for the next q or two, it can go a few bucks (5-7) in both directions depending on the demand/supply imbalance situation. Maybe a little less on the downside unless the rev growth declines significantly. Of course, if the demand situation improves, I will change my opinion on this subject.> -Pam