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

To: Art Bechhoefer who wrote (27100)	12/7/2004 2:15:35 AM
From: broozer	Read Replies (2) \| Respond to of 60323

Art I agree with you....in many ways (p/e, p/s, etc.), SNDK looks like a value play. However, I think it is more of a value trap for the reasons I listed in an earlier post. In addition, their B/S is not as strong as it appears due to the $1.25B commitment that they have to the Flashvision and Flashpartners JVs with Toshiba. And inventory is piling up. I think that is one reason why we are already seeing such aggressive pricing. After all, consumer demand for flash memory falls off a cliff in Q1. Some other things to think about....SNDK will need to raise additional capital sometime in 05 or 06 depending on market conditions. Expect another secondary which will further dilute o/s shareholders. Speaking of dilution, listed below are the dilution rates on a y/y basis for the first 3 quarters of 04.... 1q - 18% 2q - 15% 3q - 10% Those dilution rates just provide too much of a headwind! I wish Eli was a better steward for o/s shareholders. Regarding a friendly takeover, I'd love to see it but highly doubt it. Eli's hubris won't let him. Although I believe Eli is a brilliant engineer, I believe he is quite arrogant and routinely underestimates the competition. Ah, the burden of being a pioneer in a booming industry. Best, Broozer