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

To: Elroy who wrote (55059)	6/4/2013 9:52:39 AM
From: Art Bechhoefer	3 Recommendations Respond to of 60323

Elroy -- Under ideal circumstances, as you suggest, "There is always supply at a given price point, right?" In the real world, it's not that simple. If demand is very elastic, as it has been traditionally for flash memory, as price goes up, demand goes down, and vice versa. If demand is somewhat inelastic, then price increases do not necessarily cause a corresponding decrease in demand. This is especially true for commodities such as gasoline and grain foods, where there exist only imperfect substitutes. Furthermore, if demand suddenly soars to greater than expected levels, it may take some time before supplies are increased following price increases. This is because building and opening a new plant to produce flash memory can take years and cost billions of dollars. This is why Eli Harari also commented that while there might be a temporary glut a few years ago, there would also be a long term shortage because of the cost and time for building new capacity. In the short term (say, over the next six months to two years), it looks like there will be increasing demand in applications where there is no viable substitute – smartphones, tablets, notebooks, all of which need memory that does not drain the battery too much. This will lead to stronger pricing and better profit margins than have existed historically for NAND flash. Combined with the lower value of the Japanese yen, the stronger pricing should result in earnings growth of at least 10% if unit sales are flat. If unit sales grow by, say, 15 percent, operating earnings could grow by over 30 percent, taking into account scale of operations, yen–dollar rates, and continued growing demand, especially for SSD and enterprise server applications. Art

To: Elroy who wrote (55059)	6/4/2013 9:06:25 PM
From: Sam	Read Replies (3) \| Respond to of 60323

I strongly suggest that people listen to Kipp Bedard's presentation at the Merrill Lynch Global Technology Conference this afternoon, here: investors.micron.com Elroy, you in particular will find some of the Q&A of interest--Bedard responds to a question about what happens if there simply isn't enough NAND or DRAM capacity to meet everyone's needs (something Bedard thinks is probable later in the year. He also talks about 3D, Micron's roadmap for it, and what he thinks will happen with it. He pretty much agrees with Sandisk's assessment. But everyone who follows NAND or DRAM will find it of interest. Not sure if there is a transcript somewhere.