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

To: Pam who wrote (39109)	3/26/2008 8:48:02 AM
From: sylvester80	Read Replies (2) \| Respond to of 60323

Unfortuantely that doesn't jive with what Deutsche Bank analysts (albeit the most bearish IMO) are saying (see below). IMO, given the new economic and NAND pricing market realities, Toshiba and Sandisk would have to pull back from their fab spending. The fact that these estimates by SNDK were given just 30 days ago have me perplexed. Are they that stupid? I mean the stock was 400% higher 3 years ago with much less revenues and market share than they have now. So what in the hell are they doing? Who is stupid enough to be spending so much massive amounts of money only to be selling what they manufacture at a loss? Wake up SNDK management! Message 24426747 Capital intensity expected to increase Capital intensity is expected to exceed 50% in 2008 and 2009, before declining to under 40% in 2010. SNDK expects to spend nearly $5.4bn in 2008/2009, up sharply from the 2007 Analyst Day forecast of $4.4bn. The increase is largely related to increasing output of Fab 4 (200K WSPM) and spending for 3D OTP memory ($400m). The higher capex comes on top of 2007 spending that was nearly $500m higher-than-earlier expectations ($1.9bn vs. $1.4bn) due to increased output at Fab 3 and a faster ramp of Fab 4. Of the $500m increase in capex nearly $350m was funded with cash. The higher capex in 2008 & 2009 is offset somewhat by lower spending in 2010 due to the revised structure of the Fab 5 agreement with Toshiba. However the revised capex will push SNDK into negative cash flow position in 2008 and 2009 and even in 2010 the company will only be modestly cash flow positive. Meanwhile SanDisk’s lease guarantees are expected to balloon from $1.1bn in 2007 to almost $2.4bn in 2010.