|Noreg, I am not sure spot pricing has any effect at all on SNDK's profitability.|
This is one of the most naive comments that I have read on this thread this year! It shows a complete lack of understanding as to how nand flash markets behave, what one should monitor on DRAMeXchange and how Spot/Contract pricing impacts profitability and eventually shows up in nand manufacturer's/resellers income statements or quarterly results.
Sometime ago, I posted this:
...and this was your response:
It clearly shows that you didn't even understand what I wrote!
...and finally, when you understood it, you wrote this:
Which is great, better late than never! Moreover, I fully agree with what Sanjay and Judy said in 2Q10 CC and even if we all agree with what Judy and Sanjay said during the CC, it does not change what I originally wrote. You should listen to what Sanjay said carefully, and understand what he implied.
I do not know how much quantity of TLC can be purchased at prices shown on DRAMeXchange, vis-a-vis prices for 2-BPC MLC, but if ample quantities are getting sold (and this is important) in the Spot/Contract markets, at prices shown, it is inevitable that Sandisk's margins will come down, assuming all else remains the same! Sandisk has a major margin advantage, as long as they are able to sell TLC based products at prices comparable to 2-BPC MLC based products. As TLC supplies at discounted prices increase, this advantage starts fading away, and margins start coming down from where they are right now or will be in the coming quarters. Margins are currently high and there are several sources for these high margins. One of those several sources of high margins is their ability to sell TLC based memory cards in retail space for prices comparable to other suppliers 2-BPC MLC based memory cards.
Now, having made my point, I would like to add the following for other readers:
1. It will be wrong to tie my comments and observations to what position I have or may not have in SNDK stock- Long, Short or none! Treat my comments as my opinion and analysis, FWIW. What position I have in SNDK stock is irrelevant to what I am posting and that is just the honest truth whether you like it or not. What I say should be treated on its own merits, and if you find it valid, incorporate it in your analysis else just discard it. I try to be objective and most of the times, I find readers to misinterpret my posts with even a touch of negative bias, to conclude that I am Short on SNDK! This cannot be further from the truth, but again it is irrelevant!
2. My inability to post as often, or to respond to every post addressed to me, is being characterized as if I am posting something wrong. Again, this cannot be further from the truth. Those who know me, from my posts here and on other threads, know it well that it is based on a solid understanding of the industry and prevailing technology and not some silly comments that I have seen some posters make on this thread. All you have to do is to do a bit of research and review my posts on SI over the years. It is all there, out in the open! Whether it is SNDK, SPSN, WFR or anything else, it is all out there.
3. As I have said many times before, contrary opinions are vital to reach to the bottom of the truth and solidify your analysis and decisions. If you close all doors on negative opinions, just because you have a long position in the stock, the truth will remain outside and you will end up holding the stock long after it has peaked! The decision to be Long or Short or No Position in a stock is based on a net total of all factors, positive and negative, and not just one negative or positive factor! To make matters worse, these factors carry different weights and the final decision also involves factors that go beyond the security itself, such as personal situations, exposure to underlying security, tolerance for risk, etc. A decision that is good for me wrt SNDK may not necessarily be a good one for you! Focus on the merits of underlying issues that are being raised rather than who the messenger is or what his/her position in the stock might be!
4. Despite all the careful analysis you do, you will make mistakes. At least, I know that I do. The idea is to win more often than you lose and to cut your losses when you are wrong. Live to fight another day than trying to disprove that you were wrong!