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

To: Dave who wrote (26977)	11/18/2004 12:36:59 AM
From: broozer	Respond to of 60323

You are right, Dave. When I work up a FCF figure I purposely omit non-cash changes in working capital b/c they can fluctuate so much from q/q and b/c they are susceptible to manipulation. I look at things like DSO, Inv T/O, etc. to monitor non-cash working capital. I've got a limited 3 reply per day account so I'll try to squeeze so other info into this post. I really don't know what to expect this quarter from SNDK given the irrational pricing that has already broken out. By my observations, the ASP on the 512mb CF cards has already fallen by roughly 35% (SNDK forecast a 30% drop) so far this quarter, so bit growth is going to need to jump over 100% this quarter. With all of the uncertainty, my strategy has been to sell Jan05 calls against my long position. Pam, the reason I think the captive/non-captive ratio fell to 65/35 this quarter was that they were hedging their supply situation as they moved from the 120nm platform to the 90nm platform. In the event the 90nm platform didn't ramp smoothly, I believe they wanted an alternative source of supply as a hedge. I think Eli alluded to this on the CC indirectly. Let's hope that is why the inventory balance is so high and that the 4Q forecast of 65/35 is SNDK managing expectations that they can exceed. IMO, the whole 4Q results hinge on the captive/non-captive ratio as this is the main driver for their business. One of my other concerns is that the capacity of flash memory seems to be outpacing the applications for flash memory. Who needs more than a 512mb card for a camera? USB drive? I know there are people out there, but this is not the mass market consumer that shops at Best Buy and Circuit City. Maybe MP3 and Camcorders in 05? Maybe 3G cellphones? We'll see. I did hear a rumor that AAPL may roll out an Ipod in Jan with flash memory. Best, Broozer