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

To: D.B. Cooper who wrote (26886)	10/26/2004 9:46:58 AM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 60323

DB, how do you define "poor management?" Does it have something to do with public relations, and the effect on the stock price from negative analyst comments? Does it have to do with not executing a business plan well? If the latter, then I would argue that SanDisk has done an amazing job of keeping its head above water in an area dominated by giant, well capitalized firms that have the blessing of their respective governments. Consider the fact that SanDisk has positioned itself as the foremost retail brand by dealing directly with retail outlets and by producing the highest capacity flash cards in every popular format. This morning's news that SanDisk has new, high capacity cards for the MemoryStick and miniSD and MMC formats confirms a plan that is likely to result in major new appliances to compete in the MP3 and digital video markets, especially those in which Sony has an interest. I have followed SNDK closely since the fall of 1998, when I was impressed with the huge amount of cash on its balance sheet--a feature which has not changed in the succeeding six years. I was also impressed by the fact that SanDisk always factored in the reality that flash memory technology comes in several flavors, and no one has a monopoly on the technology. A successful entrant into this market must be the lowest cost producer. Now the stock is under pressure because many analysts fear a glut in the supply of flash cards and lower prices as a consequence. So how does SanDisk react? They introduce higher capacity cards in a variety of formats designed to expand the demand for flash memory. Sony is a good example. Its earlier MP3 player failed miserably on older technology and incompatible software. Now Sony and several other companies have a chance to compete with Apple's successful iPOD by offering players that are smaller, sturdier, and ultimately less expensive (appliances with moving parts are always more expensive in the end). My only reservation about the company is that it has not been able to develop applications that are not dependent an consumer buying habits. Years ago, they were working on a small size card that could be carried by armed services personnel, like a dog tag, containing the person's entire health record. This would make possible entry into a market apart from the consumer market and would lend more stability to earnings. I would like to see some additional effort to convince government officials that a small card containing health records would greatly improve efficiency in the delivery of health services. We all carry social security cards. Why not health records? Anyway, I can't fault SanDisk for its current efforts to expand the market for flash cards, and in the process utilize all that extra capacity which analysts think is just around the corner and just about to cause a calamity for the whole industry. What more could you ask of management? Art