Maybe on Monday, the 10th trading day, the close may be above 51.32. I sure hope so!
Needless to say, Don, I sure hope so too! A new 52 week high above 53.60 would be even nicer! And good call on the 28th!
There is what could be an important meeting coming up for Sandisk--Analyst Day on Feb 24. When they held this last year, the stock was around 28-29, and shot up the day after to around 32-33 or so, and I don't think it has closed below 30 since then (maybe a day or two in early March? not sure, and am not going to bother looking it up). The closest it came was this past Sept, when it was mired in a steep correction from the mid 40s all the way down to around 33 or so, as a couple of knucklehead (my characterization) analysts "saw" in their crystal balls that NAND prices were cratering, and reiterated their "Sell" rating on the stock. I'm not going to bother going into chapter and verse why they were wrong (if you are really interested, you can go to around Sept 18-23 on the Sandisk board to get an earful), but they were, and the stock obviously has recovered since then (not in time for my October options, though--:( ).
The meeting this year will be the first without Eli Harari as CEO; his co-founder, Sanjay Mehrota, is much younger (52), and, perhaps needless to say, also a brilliant guy. A "great engineer and a person of the highest integrity," Eli has said about him.
To my mind, this meeting could have some fireworks, and there are some real questions, which could lead to a strong move one way or the other depending on what is said. Questions include:
1. They gave what some of us believed was weak guidance for the coming year, although the guidance was still stronger than the Street consensus was modeling. NAND prices have been holding up well so far this year, much better than seasonal factors would normally lead one to expect. Assuming that that continues for the next 10 days, I hope that they will raise guidance for both the quarter and the year. They are notoriously conservative in giving guidance, and if they don't raise, the stock may get hit. If they do, it could go up 10% again, like last year.
2. They have been increasing market share in embedded NAND for smartphones and tablets in recent quarters, but they can only do so much because they have been capacity constrained. They have been increasing capacity by expanding Fab 4 as well as moving to the 24nm node with their partner Toshiba. Their guidance for that in Jan was to evenly spread the expansion and the cost reductions from 24nm across the year. We will get an update on how those things are going. The 32nm transition went much faster than they expected last summer, and they completed it months ahead of time. Although it may be a little early to get a definitive update on how the 24nm transition is going since they just started it a couple of months ago, it would definitely send the stock higher if they can pull that timing in. The recent upgrade from Vijay Rakesh was based on them beginning to do x3 production at the 24nm node; if they can confirm that, the stock will respond positively, perhaps even very positively, up to the low 60s, as that will be a serious margin booster.
3. Related to the last point, they have been capacity constrained over the past year--especially since July--and so haven't really done that much w/r/t SSDs. They have one product--the iSSD--that can be soldered onto a circuit board, and should be a big winner if their customers are comfortable with having only one source. They have another product--the pSSD--which is used in netbooks, and has several design wins with Sony, Acer, ASUS, and a couple of others. They have stumbled in the enterprise arena, though, announcing a product a couple of years ago that never really made it out of the gate. Being capacity constrained, it hasn't really mattered so far. And, with the success of the tablet, it may not even matter much in the next 6-12 months. But it will begin to matter when the new fabs come up, and it may even matter with the increased capacity from the 24nm move. It will be a real boost to the stock if they can announce a SSD product that will be competitive with the best that is out there, even if it isn't produced in volume until the summer or the fall. It will be important to get it qualified, and that will undoubtedly take months to do, so the time to start doing that will be by April or May at the latest. I believe that 2012 will be the Year of the SSD, not unlike this year will be the Year of the Tablet. There will be a lot of new NAND production coming from 3 new fabs, and the only way that that supply will be accounted for is if SSDs take off in 2012. And, one more related possibility--if they can announce that they can make a consumer SSD with x3 chips at the 24nm node, it will send the stock into the 60s. It may be too early for that kind of announcement, though, since as I have already said they haven't been producing at that node very long.
4. They announced that they will begin production on Fab 5 in August, but were ambiguous about whether it would begin with 1x production or 2x. They may have more to say about that. That is also important for SSDs--the cost reductions that will occur with the 1x node will be what will enable SSDs to become a mass consumer product.
This meeting might be coming a little too early for some of these announcements, I'm not sure. That is what makes the meeting so tantalizing. You can never tell with Sandisk. They are frequently full of surprises. |
