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

To: Art Bechhoefer who wrote (27288)	1/26/2005 9:16:29 AM
From: Dave	Read Replies (3) \| Respond to of 60323

Art, The company did not revise, which tells me that, under the full disclosure provisions of SEC rules, the company found no need to revise. It depends upon ones definition of what is a "material" event. I can understand your frustration with regards to SNDK, but one also needs to understand why the analyst at Bear Stearns lowered their GM guidance. Remember, the two key drivers for valuation creation are Increasing Revenues and Increasing Margins The analyst basically believes that GMs are falling due to yield issues and additional price declines in the 4th Quarter. Regarding the analyst's below consensus forecast for GMs, the analyst wrote: "We believe margins likely fell short on both the captive and non-captive business, an that there was an increased mix toward the lower margin non-captive business due to yield issues at FlashVision, its joint venture with Toshiba" (Emphasis added) "We estimate SanDisk increased the non-captive portion of its sales from 35% in 3Q to approximately 40% in 4Q, versus guidance of maintaining the non-captive portion at 35%. We believe SanDisk's non-captive product gross margins came under significant pressure in the quarter. On the captive side as well, we think margins were below the company's expectation, given the greater than expected price decline and the yield issues with 90nm production." (Emphasis added) It's easy to blast analysts especially when their opinion differs from yours. Of course, the difference of opinion creates an opportunity if you have sources of information that refute the analyst's thesis. Dave

To: Art Bechhoefer who wrote (27288)	1/26/2005 9:28:12 AM
From: slacker711	Respond to of 60323

The last time, even though the margins dropped, the overall statistics were very positive. LOL! The statistics were positive? They missed on everything. Revenue (a substantial miss), gross margins, profits....you name it and they missed. I have no idea if the Bear Stearns call will turn out to be correct, but they did manage to issue their call ahead of Lexar's warning and they nailed the reasons. Good revenue with terrible gross margins. Of course, Lexar has a substantially different business model than Sandisk. They didnt have the benefit of Sandisk's transition to 90nm or the benefits of the non-card based flash MP3 players/handsets. I am skeptical of large investment firms issuing statements just before earnings are released, as that kind of behavior tends to be self serving. How about telling us why they were wrong? SSB certainly served their customers well last quarter and it is possible that Bear Stearns will do so this quarter. Slacker