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 : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: sixty2nds who wrote (29302)	3/13/2006 7:22:48 AM
From: sixty2nds	Read Replies (1) \| Respond to of 95790

05:14 SNDK SanDisk mentioned negatively in Technology Trader - Barron's (53.06 ) Technology Trader in Barron's reports the deal that Micron Technology (MU) made to acquire Lexar Media (LEXR) could negatively affect SanDisk (SNDK). SanDisk was the best performing big semiconductor stock last year, when it tripled on surging demand and limited supply of flash. What's changed lately is the prospect of increased supply from a new flash-manufacturing venture between Micron and Intel (INTC). With SanDisk shares trading at $53.06, investors are valuing he co at about 22 times the First Call consensus forecast for 2006 of about $2.40 a share. But that earnings estimate ignores the cost of employee stock options -- as so many tech stock forecasts still do. With option expense, SanDisk's 2006 EPS could come in around $2.07, according to RW Baird analyst Tristan Gerra. That would make SanDisk's '06 earnings multiple more like 26 times. SanDisk has always enjoyed terrific profit margins, in comparison with other companies in the memory business like Micron. Much of the difference owes to patent royalties that SanDisk gets from other flash makers like Samsung. In 2005, SanDisk had a gross margin of 35.5% on its products, while Micron's was only about 20% as Micron slugged it out in the commodity market for DRAMs. That differential makes the author think that Micron could sell its flash products at prices that improve Micron corporate margins but undercut SanDisk's prices...and profit margins.