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Technology Stocks : WDC, NAND, NVM, enterprise storage systems, etc. -- Ignore unavailable to you. Want to Upgrade?

To: Elroy who wrote (4004)	10/29/2018 5:00:23 PM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 4827

If WDC is signaling its customers that, by delaying increases in production capacity, it doesn't intend to drop prices for NAND flash, then it's likely the Korean competitors Samsung and SKHynix will increase their own market share, unless they also decide to curtail capacity expansion and keep prices stabilized. Those of us who have followed SanDisk over the years know that Samsung, if not others as well, delights in doing whatever it can to flood the market with low priced chips, thereby driving away competition. They have done this in the past, even when it produced losses for themselves, on the assumption that they would pick up market share. For a variety of reasons, I believe this strategy of flooding the market and driving down chip prices is less likely to occur this time around. Samsung may have improved its gross margins, along with Hynix and MU, but I believe that WDC still has the competitive edge on gross margins, owing partly to improved technology and partly to the weakness of the Japanese yen, now at about 112 to the dollar. So if my reasoning is correct, then I can't understand the weakness in WDC shares. I can also understand why the shares might not go above $60 in the next six months to a year. but that still leaves me wondering how they could have dropped this low. The decline in WDC mirrors declines throughout a large part of the tech sector, plus many other sectors including biotechnology and durable goods in general (e.g., automotive). The reasons for this overall decline are a combination of rising interest rates and rising costs to consumers, owing to the impact of tariffs. There may also be increasing fears among more conservative investors (which includes many institutional and large fund managers) that the November elections will lead to fewer benefits for them in the form of tax cuts and deregulation policies, which they like. Yet there is no factual basis for assuming deregulation and low taxes cause stock prices to rise. The opposite is closer to the truth. Art