Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Ausdauer who wrote (26371)	7/14/2004 6:35:02 PM
From: Art Bechhoefer	Respond to of 60323

Aus--re: 90 nm yield. That's just one of the factors that could improve profits in Q3. Eli also mentioned price decline (another 40 percent) and the resulting INCREASE in total sales, and growth in "shoot and store" and cell phone cards. Note that there was a decline in OEM sales for digital cameras in Q2, making the overall gains all the more remarkable. Eli said that the decline in OEM sales is due in part to the higher priced cameras not being supplied with any flash cards, and the camera customers buying more retail, higher capacity cards as a result. The 90 nm transition is just starting, and I got the impression that the main impact will not occur until Q4. At the same time, I also sense that overall demand growth for NAND is such that SanDisk will have to increase its purchases from others. But counteracting the lower profit margins from those purchases will be the high yields and lower cost of their captive 90 nm production, plus better results from MLC. Stepping back to look at all of this in perspective, I get the impression that SanDisk is now even more dominant at the retail level than before, making it easier for SanDisk to set prices. I also believe that the extra effort in branding SanDisk products will lead to higher margins in the future. Assuming that U.S. stock prices improve somewhat in the second half of this year (very likely in an election year), the overall investment climate should provide a basis for SNDK to outperform the semiconductor sector and reach a level ranging from $35 - $45 by year end. One possible mitigating factor would be earnings dilution from the sale of an additional 3 million or so shares, but that is fairly minor, given the total number of outstanding shares. Art