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

To: Michael C. Woodward who wrote (2397)	1/18/1998 7:07:00 PM
From: Bargain Hunter	Read Replies (2) \| Respond to of 60323

I went back and looked at the press release where Dr. Harari made his comments (http://www.sandisk.com/pr/97Q3.htm). Here's what it says: >>Harari also stated, "Bookings and shipments during the third quarter were strong as our consumer electronic OEM customers are stocking for the upcoming holiday season. We are expecting product revenues in the fourth quarter to be flat, or possibly up slightly relative to the third quarter of 1997, albeit perhaps at slightly lower gross margins due to anticipated increased competition. The outlook for the first quarter of 1998 is uncertain due to the seasonal nature of the consumer electronics markets addressed by CompactFlash. "<< This press release was dated the same as day as the one which announced the company's intent to hold a secondary offering (http://www.sandisk.com/pr/971015b.htm). When you are planning a secondary offering, you have to be conservative in what you say, because stock prices usually decline at some point after the offering and there are attorneys who stand ready to pounce on anything that can be construed as concealment of pertinent facts. Even in retrospect I find it hard to fault what Dr Harari said. It was appropriate to remind investors that the big jump in 3rd quarter sales was largely attributable to camera makers buying CFs to sell to retailers stocking for Christmas and should not be expected to be repeated. The problem is that the momentum players were heavily into the stock and had driven it from about 8 to 40 in less than a year. At 40 it was seriously overvalued by any normal measure. Just as the momentum players had pushed the price too high, they subsequently pushed it too low, presumably helped by tax selling. I, too, suggest that anyone who wants to continue criticizing Dr Harari's comments should be specific in what they believe was incorrect about what he said. So long as what he said was accurate and honest it is inappropriate to complain. So what is the lesson here? Stocks in general, and tech stocks in particular, can temporarily be priced significantly differently from their underlying value. Sometimes they are bargains (e.g. SNDK at 8-ish earlier last year). Sometimes they are overvalued (e.g. SNDK at 40-ish in October). Buy them when they are bargains; sell them when they are overpriced. Dr. Harari's comments generated a buying opportunity by returning some sanity to the stock price. Use it wisely. While I am on my soapbox, let me comment on the practice of sending questions to the company through a single point of contact. If you feel you have a pertinent question that might affect your investment decisions, why would you wish to broadcast it on SI then wait for the answer to be broadcast on SI before you see it? Call the company yourself, ask the question, act on it, then post to SI if you wish.

To: Michael C. Woodward who wrote (2397)	1/18/1998 7:13:00 PM
From: Jim Cash	Read Replies (1) \| Respond to of 60323

<<What you must understand is that public companies have to be cautionary and avoid surprises in the marketplace>> Michael, I agree with everything that you are saying 100 %. Either you are missing my point or I am not communicating effectively. We want no negative suprises.. However in this situation no suprise was forthcoming, the Dr. threw cold water on us for no reason whatsoever. He stated that earnings would be flat quarter to quarter. However the "Flat" earnings of the next quarter would still have BLOWN AWAY the almighty estimate. What happened is that the street heard "FLAT" and the stock tanked.Since then analysts have raised the estimates for this quarter to equal what we earned last quarter. We missed a big run on last earnings and another run this earnings when our "flat" earnings would have blown away the original estimate. I don't think I'm being way out of line in thinking SNDK could possibly be testing 60 rather than 20 if the good Dr. simply did what he is paid to do. Run the company and warn us when you are NOT going to meet estimates..