Ed,
I don't mean to insult the CEO or anything by calling him an idiot. It's just a way of conveying my frustration and expressing my point. I am sure his skin is thick enough that if I tell him that right in his face, he would just laugh it off (more on constructive aggressiveness later). I am also an experienced investor and I do know when to take profit and I do understand the stock game. There are enough unforeseable factors in the stock market such as bad economy, negative statement by Greenspan, bad earnings, El Nino storm, analyst downgrade, and so on, but when it's the CEO who shoot himself in his foot and in your foot, then you have to be mad because there is no way you can predict ahead of time. There is also no reason for him to do so.
Enough negative. Now despite my ranting about the CEO, I do think this guy is brilliant. The more I read about this company, the more I think he is a genius. OK, the real value of this company is in the 38 patents that this company owns on flash to protect their intellectual property, plus the flash standard that this company has established. Yes somehow, this company succeeded in getting almost all the digital camera manufacturers to sign up for the Compact Flash. Plus they got 60 companies to sign up for their flash drive standard. You can be assured that Sandisk will collect tons of royalty money for years to come. You know that when you use one type of flash (i.e. Compact Flash), then you're stuck because the flash memories from other companies are not compatible.
Somehow, I see a lot of similarity between this company and MRV Communications. Both CEOs, Eli Harari and Noam Lotan, seem to try to play down the success of their own company, so as not to wake up the 800 lb gorrilla. I just hypothetise the reason for the CEO for "downgrading" his own company. Very quietly, both companies are taking over the giants, Intel in one case, and Cisco/3Com/Bay in the other case. Personally, I think this strategy of playing down the success of your own company, if true, is a little bit naive as I am sure every company would have industrial spies to know what their competitors are doing (obviously, they don't read Sandisk's earnings report on Yahoo to find out what Sandisk is up to). I have worked for many high tech companies, small and large, including Intel, and I have witnessed how much they know about their competitors. In a couple of instances, I saw the marketing guy/gal bringing in products from the competition and pretending he/she is doing the selling in front of the engineers. The marketing person brought out all the good points of the competition's product and make you scared, because now you realize how inferior your product is compared to the competition.
Now back to the subject of Sandisk, I think this stock will triple or better again next year like it did this year. So the long term picture is very bright and I don't worry. The short term picture is this stock may languish around the mid 20s for may be a month, or worse come to worse til early next year, before bouncing back to the high 30s. You may then ask why do I have to be upset if everything is OK in the long term. I am upset because like everybody else, I have my own plan about how I would use part of my profit from this stock for other purposes like withdraw some money to pay my car debt. Now I have to wait longer for the stock to recover. This kind of statement by the CEO really makes the stock unpredictable and it hurts people. Some people may buy on margin, some others see their option expires worthlessly, others may need the money for college education, and so on. Selling part or all of a stock is not a crime. And selling does not mean you're not long term in a stock. Like in my case, I only sell my profit to diversify elsewhere and to pay my debt, but I will continue to keep a core position in this stock for the very long term.
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OFF TOPIC: about constructive aggressiveness.
About a little bit more than 10 years ago, I worked for Intel. This was when the company was small enough that Andy Grove, the president of Intel back then, personally taught some of the management classes. He taught about management by objectives (I don't care how you do it as long as you meet my objectives, and I don't want to listen to your excuses if you don't meet my objectives), and about how to conduct yourself in a meeting. In a meeting, you are supposed to be aggressive and use whatever language, including four letter words, to get your points across and convince your team members to do your way. So you fight hard in a meeting, but when you're out of the meeting, you must buy in to the concensus of the team and do the way the majority of team members have agreed upon, and there is no more fighting. So this is what I call by constructive agressiveness during a meeting or a discussion. So when I called Mr Eli Harari an idiot, I am just simply trying to get my points across, and there is no ill feelings towards him. Believe me, I have worked for companies where everybody is supposed to be polite to each other, and people write memos when they disagree, and so on with all the BS. You can guess the result: nothing gets done at those companies. I am sure that Sandisk, an aggressive high tech company, would operate almost like Intel, and Mr Harari would have thick enough skin to laugh it through if someone calls him an idiot.
Sorry for my long ranting but you get me started :) |
