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

To: JesseK who wrote (26268)	6/29/2004 4:43:36 PM
From: Bridge Player	Respond to of 60323

You are so right. The stock was pounded about $1.10 lower after hours on this news.

To: JesseK who wrote (26268)	6/29/2004 5:20:23 PM
From: Ausdauer	Respond to of 60323

Jesse, yes, bad news. I guess it is bad news for LEXR. If SNDK has taken market share away, that is good. Look at LEXR's gross sales and comps from 2003. Overall sales are still good, they are just caught with stale, overpriced inventory. SanDisk does not purchase non-captive flash unless they have already exceeded their organic production. Thus, they can dial in a profit margin based on their cost structure which is vertically integrated. Thus, even with the cost reductions Eli still is hoping for gross product margins in the range of 30% or so. As I posted earlier today, SNDK's price reductions will really hurt card assemblers with fixed or inflexible cost structure. It may also hurt SanDisk if sales flop despite lower ASP's. The fact that SNDK announced an earnings call and did not offer any earnings shortfall is a positive. The market has already lopped off 1/3 of SNDK's market cap since last Q. I am not saying this is protective against further amputation, but some of the cost structure maneuvers announced on last c.c. must already be factored in on the street. Aus