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

To: slacker711 who wrote (32484)	6/13/2006 3:17:58 PM
From: inaflash	Read Replies (1) \| Respond to of 60323

The requirements for the handset market are very different from the MP3/PMP market. Much of the storage in handsets is coming in the form of cards which gives the handset manufacturers quite a bit of flexibility as to the density they need to supply. Also, the storage is a secondary characteristic for most handset buyers....where as in MP3 players it is the primary differentiator among the competitors. If the NAND market tightens up, the handset manufacturers can cut back their density requirements by buying smaller cards. There is very little reason for Motorola to advance purchase their NAND needs. Perhaps Sandisk will decide that they need to generate more cash (I am sure Pam knows whether they need to), but I really doubt that Motorola would be the one to step up to the plate. I'm just speculating here, but with MP3 players and handsets converging, storage capacity is going to be an issue in handsets as well. The rampup of microSD is going to be a limiting factor and no handset manufacturer wants to be caught without the 1GB and larger cards needed. Yes, they can use smaller cards, and 512MB is much more than 128MB, but psychologically below the 1GB level, and poor in terms of trading off. It's also easier to sneak in a $10 or $20 cost in the handset, especially via all the provider discounts and subsidies, than have the customer have to consider spending $50 cash on a memory upgrade at the point of sale. This is most important if there is significant competition with higher storage capacity (i.e. Samsung phones). businessweek.com Motolola with the ROKR experience knows first hand how limiting the number of songs, either artificially or by lack of flash memory limits the success of the product.

To: slacker711 who wrote (32484)	6/13/2006 3:47:24 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 60323

Regarding the rumor that Motorola might buy SNDK shares as an investment (which is different from buying a company outright), it would probably help Motorola stay competitive by providing them another profit center. More and more Motorola handsets come with a slot for trans flash (microSD), so why not invest in the company that's making all those flash cards and lower your own effective cost of those very cards? I find it a plausible scenario, but I doubt that Motorola would simply buy shares on the open market. Instead, they might engineer a deal whereby SNDK sells them new shares of preferred stock, exchangeable into common stock at a later date, somewhat similar to the last deal where SNDK sold convertible preferred bonds that can be profitably exchanged if the stock price recovers to somewhere near $80. Art