To: Bargain Hunter who wrote (55055 ) 6/3/2013 2:23:24 PM From: Art Bechhoefer Read Replies (1) | Respond to Warren Buffett avoids tech stocks because he says he doesn't understand them. He still bought IBM, so he must know something about tech. But there are certain fundamentals that anyone who regularly reads financial reports can understand:Has there been a management change that might portend future problems? With the retirement of Eli Harari, some might be inclined to question the abilities of Sanjay, even though Sanjay was a co-founder of SNDK. The management quality to me looks pretty good, especially the top officers, including Judy Bruner.Have there been unfavorable changes in the overall market demand for the company products? Demand for NAND flash is getting stronger, spurred by SSD and enterprise storage demand. In fact, because many analysts do not make much distinction between NAND flash demand and demand for other semiconductors, including DRAM, SanDisk tends to get a few more questionable ratings.Has the company's market penetration improved or declined? Thanks to the Apple v. Samsung disputes, Apple has stopped buying many components, including flash memory, from Samsung. SanDisk, after adjusting its product mix to include more embedded flash, now has replaced Samsung as a major supplier to the largest buyer of flash memory in the world. The SanDisk brand, moreover, in the retail sector continues to improve, especially for high capacity units for cameras and video. SanDisk offers the best combination of speed, reliability, and price.Have world economic conditions impeded growth or SanDisk's ability to compete? Although demand in the European Union nations is pretty much stagnant because of the recession in Europe, demand throughout Asia, Africa, and Latin America continues strong, buttressed by customer upgrades to smartphones and tablets. The Japanese yen devaluation, moreover, has now given SanDisk a competitive edge over its chief competitors in Korea. Worldwide demand for NAND flash is growing sufficiently fast to prevent a glut from overcapacity. In the next few years, in fact, it is likely there could be a shortage of NAND despite new manufacturing facilities.Are new technologies under development by competitors such as Samsung likely to undermine future SanDisk profits? Though Samsung may be devoting more energy to making 3D chips at present, it appears that SanDisk and Toshiba are making similar headway even if they have decided to concentrate new production on existing 19nm, MLC, and TLC technologies. If Samsung were to take the technology lead in 3D, the impact on SanDisk products and margins would probably not be significant for another two years or more.
