MU Reports -.21 loss on 1.44B Slightly beat estimates by .01 and revenue beat by .03B   Off .18 AH to 11.61

SNDK dropped but stabilized I bought 55.04 at the close and again 54.50 in AH I still see good news coming for SNDK…  sitting @ 54.80 ATM

SNDK down 2.5% after MU reported after hours yesterday. MU is down 6.6%. I bought my SNDK @ $51.70 and I’m willing to ride back down a bit more, if necessary, because I like the potential of this to revisit its Sept 4 level of $58. Then again, I don’t pretend to understand the trading action in this name.

Markets up, SNDK down as much as 1.5%. If it can’t rise on today’s excitement, what will it take? Still in the green on this one, but losing faith in my ability to understand this one.

That is just exactly my strategy, except my cost basis is just slightly higher. The only thing scaring me is that SNDK is down 3% when the markets are ramping. Hope there really is support not far from here or else I’ll get stopped out for a small loss. 

IMHO, I see no reason to question the potential.  The street isn’t expecting much so downside should be minimal.  MU’s report wasn’t great but they’re wed to American Mfg costs and meeting high volume low price customer margins (read Apple).  SNDK, MFG in Asia and sell their own products, no OEM…  margins and opportunity much better.

Moved from Intraday Thread:

Funny about SNDK and the jackass way analysts measure ASP per GB when they should be looking at ASP per SKU. Number of GB’s sold simply increase faster than the price declines…  Once prices get low enough spinning hard drives will disappear, first in notebooks, then in servers, finally in desktops.  Price declines are great news… SSD bring em on

One analyst’s reason to avoid SNDK for now, due to the usual seasonal impact (if you don’t know what I mean, check SNDK this time last year running through to December):

Since just after the July 4th holiday, SanDisk (SNDK) has struggled to hold on to its lofty rise in CQ2, and what a great run it had been. However, last week the whole sector took a belly punch with Micron’s (MU) poor showing in their Fiscal Q4 report, revisions from the sell side flew like feathers at a chicken fight. It all seemed pretty straight forward. Supply/demand imbalance, pricing tanking (spot prices have been running well below contract prices), and huge capital demand, all are weighing against the sector, not mention the “whither goest the consumer” conundrum weighing on everything. A surprising exception was Baird who kept their ‘Outperform’ rating on Micron, with analyst Tristan Gerra saying its business has started to recover. He expects the company to return to profitability in the next May quarter. But in a note to clients on Friday Baird advised that SanDisk’s SD card pricing was down 3 percent and its miniSD card pricing was down 1 percent on average this past week. As usual, however, the market’s rationale is more complex than the stories we read in Forbes. Monday morning, researcher Avian Research, in delivering one of the more insightful comments we have seen on the subject wrote:

With semiconductor shares massively decoupled from a roaring global stock market, the first time ever chip stocks in their forty year history have “missed” an economic upsurge, indeed the strongest world economy in a century, the weekend after Fairchild Semiconductor’s Fiftieth Anniversary reunion, why not play the memory stocks? After all, one downtrodden, commodity group after the other has roared these past five years, regardless of how poor the earlier fundamentals. Why? Global Integrated rowth, begun five years back in the depth of stock market depression. 1) Massive Asian capital flows, the incredible profits of their boom being put to work, just like Japan, Inc did 30 years ago to stem the Oil Shokkus, in high volume memory chip production. Rate of return bogies are much lower over there than here, secularly compressing US memory valuations.
2) Weak pricing in the seasonally strong point of the year, following substantial over-trend capital spending throughout the preceding 18-24 months. Even reduced from its year ago “peak”, memory capex remains way above the average rate of the prior 30 years. Not good!

3) Memory ASPs across the mix are downward biased entering the seasonally strong Q4, with Micron reporting that if DRAM and NAND contract prices hold flat from their H1Oct levels, respectively down 5-8% and flattish from H2Sep, that pricing for their November quarter would be DOWN 10% and 20-25% vs their August level.

4) Because memory prices almost certainly drop for seasonal reason[s] every year following Thanksgiving, this means a sharp downward bias for the December 3 month period such as SNDK and SPSN serve.

Our conclusion is the pricing hole is right now too severe to tackle, that the season is moving to work against you and the demand drivers for 2008 are already identified by those making the supply creation decisions in terms of new capacity. Avoid.

Justified or not, the sentiment around SNDK is undoubtedly negative at the moment, thanks chiefly to the bearish attitudes towards anything memory-related:

Bob Faulkner
Expect Further Weakness in Memory Space
10/10/2007 8:28 AM EDT
We are in the midst of the seasonally strongest period for commodity memory—DRAM or NAND flash. I’ve made a number of comments about weak DRAM pricing, but it would appear that NAND contract prices are not materially better.

In the chart below are the average contracts for the popular 16GB multi-level cell parts comparing the last five prices to the equivalent period last year. The price weakness speaks for itself and is fairly consistent across other part configurations.

There’s still a lot of production capacity in the memory space, and that will not be changing anytime soon. Prices for DRAM and NAND will be weak for quite some time to come, so you should continue to avoid this group. Don’t get sucked in by book-value valuation logic; book values can go down too.

T, Thanks for the article.  I continue to note DRAM and NAND lumped together in many assumptions, when everything I’m reading says the problems are over supply in DRAM but potential under supply in NAND.  Toshiba, SanDisk’s MFG partner is reported to have already taken max orders for what they can supply this quarter.

Specifically for NAND, they’re missing three small letters moving forward “SSD”  (Solid State Drive).  It will be HUGE and as yet (as far as I’ve seen) no one is seriously factoring the long range impact of SSD on the industry.  As prices drop on NAND feasibility and adoption of SSD will skyrocket.  As will a certain company receiving royalty payments and producing their own SSD products.  SNDK Already shipping 32GB version in some dell and HP notebooks.  And Samsung already suppling 64GB SSD to Dell.

Q, I couldn’t agree with you more.. I ranted about this all through SNDK’s swan dive last year, and nothing’s changed - not even the Street’s stupid and myopic vision of the memory business and the meaningless metrics it uses. I learned the hard way that logic fails SNDK analysts, and it is especially vulnerable to sentiment shifts, bear raids, and outright manipulation by both traders and very devious analysts. Still, if you’re in now around $51 and a stop around $50, you can’t really go too wrong I suppose, and the upside potential is obvious.

Just don’t get too married to SNDK; she’s a bitch, and she’ll scratch your eyes out while you’re asleep

09:24   Semiconductors: Q3 earnings preview for PC, Memory, and Microcontroller - AmTech

AmTech says despite the mid-August credit crisis, eroding housing market, falling dollar and fears of a recession dominating the news, they expect mostly positive Q3 earnings results to confirm their bullish demand scenario laid out in their Q2 earnings preview and subsequent notes. PC demand remained strong throughout the quarter, driven in part by a weaker dollar and the transition of buying from desktops to notebooks for back-to-school. Industry NAND pricing firmed in the quarter as AAPL announced an aggressive product portfolio of NAND-based media players, and bit growth did not accelerate until late in the quarter out of Samsung and Hynix. DRAM prices rebounded from July lows, but remained relatively weak throughout the quarter.

and

09:26   AAPL Apple: Is iPod’s hard drive days numbered? - BusinessWeek Online (167.86 ) -Update-

BusinessWeek Online reports evidence is mounting that hard drive-based iPods may be on their way to extinction. Assuming trends continue, Apple would be able to put 128 GB of flash into an iPod for roughly the same cost as today’s 8 GB within three years, says iSuppli analyst Andrew Rassweiler. Since the other three iPod models and the iPhone are already flash-based, the classic seems sure to follow that path. That’s going to be bad news, of course, for suppliers of hard drives, notably Seagate (STX), a regular iPod contributor. Though Samsung and Toshiba both supply iPod hard drives, both cos also make flash chips for the other iPod models, suggesting they would generate new business if Apple goes all-flash with its iPod family.

You two guys are influencing SNDK share price.  Trading up while market is trending down .

Someone (could it be SN…) bought 2000 Oct $60 calls.

Down 3.5% yesterday on no news in the face of a strong market, up 1% today. Very susceptible to manipulation. I lowered my stop during the dip and am happy to still be in. Feel like I won that partiular round vs. the manipulators. The trick will be to hold firm through earnings and possibly beyond.

[quote author=“lumi”]Down 3.5% yesterday on no news in the face of a strong market, up 1% today. Very susceptible to manipulation. I lowered my stop during the dip and am happy to still be in. Feel like I won that partiular round vs. the manipulators. The trick will be to hold firm through earnings and possibly beyond.

I’m holding tight on my core SNDK actually added to core @ 51.10 yesterday and also bought a leveraged trade same price.  Sold the leverage @ 51.90 and shorted twice 51.99 and 51.75.  I decided to play intraday both ways when 52 was not taken.  I’m expecting a floater until news flow gets positive. Might as well scalp a little.  back to 51.51 now.

Edit:  Covered the shorts made .79 and .58 plus the .80 long trade held from overnight…  Feeling better

SNDK downgraded from BUY to NEUTRAL by Oppenheimer this morning. Stock barely down in the PM. Maybe a sign of a bottom?

[quote author=“Tommo_UK”]SNDK downgraded from BUY to NEUTRAL by Oppenheimer this morning. Stock barely down in the PM. Maybe a sign of a bottom?

The downgrade caught up with a vengeance after the open… down almost 3% now and looking like testing $50.. this either bottoms here, as Q and others are hoping, and offers a great entry point, or the bottom falls out of it and it gets raided to hell like last year

I still have no position in SNDK, yet, but if $49.50 breaks with conviction it could easily sell off to around $46 - which would be pretty attractive, frankly.