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Thanks AJD....this is a swing trade for me, so won't overstay my welcome. Given SNDK's recent history of beating their numbers, I bet they beat estimates by a decent margin one more time. We shall see. Appreciate the heads up.
Rob
My take on SNDK for what its worth..............
From a post I made to abother board:
In an article I read in the EETimes dtd 11/24/2003, a market research firm iSuppli was quoted as asserting that the demand for high end cell phones was out stripping supply. They raised their 2003 forcast of handsets from 480M units to 510M. They also moved up their 2004 estimates to 550M handsets. As part of the article there was a quote that most NAND flash memory makers were selling on allocation (which I noted should be good news for companies like LEXR and SNDK.)
This week SNDK and LEXR were roiled by an analyst comments on concerns in the group attributed to talk of rising flash card supply in the spot market and talk of aggressive retail rebates.
SNDK and LEXR were defended by Susquehanna believes that strong demand for NAND flash memory continues while the supply remains tight. Contract pricing for Dec edged up slightly and firm continues to believe that Lexar and SanDisk are key beneficiaries. Notes that the spot market is not a good indicator of supply and demand trends. According to firm's sources, Samsung has forbidden sales of its NAND flash memory devices to the spot market. As a result, the spot market exists due to distributors/agents that are attempting to make short-term profits in an undersupplied market.
Furthermore this very same week SNDK and Toshiba announced a JV: SNDK and Toshiba announce that they intend to cooperate in the construction of a new 300-mm wafer fabrication facility at Toshiba's Yokkaichi operations in order to meet growing demand for NAND flash memory. The move is expected to allow mass production in the new facility to be advanced to the second half of Toshiba's FY2005 from the originally planned FY2006.
NOTE THEY ARE ADVANCING the scheduled production schedule. Is this what companies do that are already seeing pricing pressures and oversupply?
Here for your review are SNDK and LEXRs last 4 Qs numbers:
SNDK
Oct 15 2003 Earnings SNDK beats by $0.15
Sep 15 2003 Guidance SNDK upside preannouncement
Jul 16 2003 Earnings SNDK beats by $0.21
Apr 16 2003 Earnings SNDK beats by $0.15
Jan 22 2003 Earnings SNDK beats by $0.07
Oct 16 2003 Earnings LEXR beats by $0.03
Jul 17 2003 Guidance LEXR upside preannouncement
Jul 17 2003 Earnings LEXR beats by $0.03
Apr 17 2003 Guidance LEXR reaffirms
Apr 17 2003 Earnings LEXR in line
Jan 29 2003 Guidance LEXR warns
Decent recent performance imo. And everything I read suggests that Digital Cameras will be a very hot item this Xmas. Sales of added flash memory for those gift cameras should run into the 1st Q of 2004.
Excerpted from a SNDK press release dated today:
"SanDisk Corporation (Nasdaq:SNDK) today reiterated its positive business outlook for the fourth quarter of this year. In its statement today, the company said, "We are confident about our business prospects for the fourth quarter, as first provided on October 15, 2003. We continue to see high bookings for our products, and the pricing environment remains benign. Retail promotions in the US over the Thanksgiving weekend were very well received and associated sell-through exceeded our expectations. We are continuing to maximize our flash memory supply from both captive and non-captive sources to meet the seasonally strong consumer demand for our products. Our 2003 total revenue is forecasted to exceed $1.0 billion, up from our September projection of $950 million. SanDisk revenues were $541.3 million in 2002."
ARE THEY ASKING FOR A LAWSUIT IF THEY ARE MISLEADING? They are upping revenue guidance by 50M for the entire 2003 year. Since most of the year is done, by inference they are upping Q4 by 50M.
http://stockcharts.com/def/servlet/SC.web?c=sndk,uu[h,a]dacanyay[pb50!b200][vc60][iLi14,3!La12,26,9]...
On a technical basis the on SNDK it has retraced almost 100% of the move from 62.25 to 86.30. Its broken through the 50dma and the occilators are still pointing down. I think that when you see evidence of a bottom, this would be a very nice trade to take. I started buying the Jan 04 70 calls on Friday. Option expiry is after SNDK's tentative earnings report of 1/14/04. I will add to those options on further weakness. I like the risk reward.
Disclosure: Long LEXR common and SNDK calls
My .02 Rob
East Bay think that was PS...as in PS2 (from SNE) sales in China...PS2 uses RDRAM.
Rob
Options expire next week...eom
Jenna, if was are already members do we have to sign up for the gap learning session...or are we automatically included?
TIA, Rob
Lehman downgraded CSCO yesterday <eom>
Rob
Anyone else having a problem getting on the Marketgems website?
Also, having a tough time opening the newsletter PDF file for some reason. Rob
Zeev, my understanding on RMBS is that even should the FTC come out against RMBS, the appeal would be to the very US Court of Appeals that upheld it's case against Infineon. Is this correct? Rob
Zeev, from what I understand about RMBS; the story is that the Supreme Court has to decide whether to hear the appeal of the Rambus vs Infineon case by next week (Monday or Tuesday?) otherwise they will not hear the appeal and the prior Appeals Court verdict in that case will stand. The fact that the case was not placed on the Court's docket this week only leaves next week in which the Supreme Court can decide to hear the appeal. That is causing some people to front run that decision. Two reasons are usually cited for a decision not to hear the case: 1.) There are many more pressing cases to be heard and 2.) The Supreme Court usually defers to this particular Court of Appeals since they are much respected in patent law cases. Of course then there is also the FTC case against RMBS to be resolved. FWIW,Rob
I don't think that UTSI owns 60% of the Chinese cellular phone market. UTSI uses a wireless technology called PAS (Personal Access System) and they own 60% of that market. Big difference. PAS is a good system for emerging countries without alot of mobility in its citizens because it is limited in that IT DOES NOT ROAM. So if you leave your city, and go to another city you can't use your home PAS phone there. You need another phone. That is why this technology is being promoted in China, India, Africa and Latin America. It's biggest positive from a competitive stand point vs traditional cellular systems is it's cost to install, operate and cost to the consumer. A PAS network costs $100/customer to install vs $200/customer for a GSM system. PAS service costs .01/minute vs .05/minute for GSM service. FWIW, Rob
Zeev, what is your downside projection for OVTI....I have it currently in a box of between 39.50 and 43.20. Dies that coincide with you read? TIA, Rob
Bear.....The Eyetoy is a camera attachment for the PS2 platform. (Camera furnished courtesy of OVTI). The Eyetoy focuses on the game player and "puts" the player into the game by showing him/her on the TV screen where by moving his/her body (like grabbing for on screen targets) they interact with the game software. It is the the logical extension of those gaming gloves where movements of the gamers hands interact with the game. IMO a great opportunity for exercising games like boxing with a virtual opponent etc. OVTI is projected to get 22 million in sales from it this year and 250 million by 2005. Rob
Stockkid...since you are knowledgeable about gaming, I wonder if you have any opinions on EIDSY and or the Eyetoy Camera for the PS2 ? The Eyetoy rolled out in Europe and from what I hear was very successful. SNE is to roll it out in the US in time for Xmas. Thanks for any insight you may have. Rob
I signed up yesterday afternoon.....got a confirmation within a half hour with a password (dont know what that is for since we get a daily password with the email of plays). The daily plays came in fairly late at night....I think maybe 12:30-1:00 am CST. Rob
I enter MIRC through my desktop icon that I put there after downloading MIRC. After the double click there, and it opens..I click on the lightning bolt on the top tool bar of MIRC.....that connects me to the financial channel....and after a few seconds....a log on box appears.....you have an empty box on top where you put in "#marketgems" (without quotes) and the password you got in your email from Jenna.
Hit ok...and youre in. Hope that helps. Rob
Tacky...Im not sure...but I think you dont need a bank statement until you go "verified" on Paypal...unless there is a problem cause of you being in a different country. I used Paypal for quite a while til they required me to go "verified" and submit a bank account. Rob
I've notified Alfonso.....hopefully when he gets a chance He'll be able to help you guys.
I log on to Mirc....then I hit the little lightning rod on the top tool bar...that connects me with MIRC Financial chat....a log on box will pop up...and then I typed in #marketgems and the password..and Im in...Rob
To get in to Mirc...have to enter #marketgems and then the password...worked for me. Rob
Same problem here...cant figure out how to enter Mirc chatroom (no place to put password)...wont let me in the old way and tried through Market Gems site..no luck that way either. Rob
I cant seem to log onto the message board for updates. What do we use as our name? Is that our real name, our email name, or our Ihub name? I know the passowrd form receiving last nights email. Thanks in advance, Rob
O/T Mainehiker....you and your mom are in my thoughts also. My mom had a massive heart attack about 10 years ago and we were able to keep her for a 2 year period after the attack. I saw her everyday, and was never sorry I spent the time. I still "visit" her and my father every 2 weeks, and wish both my parents were still around. Peace, Rob
Tacky type #marketgems
I love APPX and ELAB but they are certainly not undiscovered gems. I bought APPX before earns and rode it for 10 points before writing covered calls, figuring since it ran into the split chances were good for a retrench after. BIG MISTAKE, Oh well.
The stock I'd like to focus on is GPRO (not exactly a drug co but associated field) It will trade split 2/1 on 9/30 for holders of record 9/16. So there may be a split play there.
Also, their West Nile Virus blood test is up for FDA approval.
GPRO currently tests about 75% of the US blood supply. For this they get $4.40 per unit of blood currently. When the FDA approves their West Nile Virus test, this fee goes north of $10.
Love the company....want a good entry for the stock...cause buying at the wrong price can be detrimental to stock portfolios health.
Rob
OT Titan...Augieboo has been taking care of relatives and is now traveling to visit other relatives. Rob
JDAASOC.....have you heard how SNE's rollout of the Eyetoy pack for the PS2 platform is going? I am interested because although I have heard anecdotally that sales are doing great in Europe, I have not heard much about the US rollout taking place this qtr and next. This would impact my core holding of OVTI since it makes the camera sensors for the Eyetoys. FWIW, gaming sales of OVTI has gone from 1% of sales to 12% of sales in just 2 qtrs for OVTI based on this contract with SNE. Would hope that the North American market could at least double that. Rob
News out on NVEC, CY sold 686,849 of their NVEC shares and it's taking down NVEC in after hours. Rob
LEXR
You have to love the sector they are in. Cell phones,PDA's,digital cameras, cell phone cameras, MP3 players and who knows what other digital products that will require storage are growing at exponential rates. The Photo Marketing Association estimates there are 23 million digital cameras in the US alone. LEXR estimates that there will be 40M more digital cameras sold in 2003. Infotrends Research Group sees that by 2008 digital cameras will nearly replace film cameras. OVTI estimates that the cell phone camera market will be in the 36-37 million area for 2003. By 2005 it is estimated that 50% of all cell phones will be camera enabled.
Currently, growth is needless to say strong. Q2 shipments were up 29% Q over Q. Revenues of 85.4 M were a 140% jump yoy while eps was up 350% yoy to .09/sh. WR Hambrecht estimates 25% unit growth excluding JumpDrive....while SNDK is estimated to grow 30% excluding mini-SD units. Hambrecht estimates SNDK Q3 revs at 248 M and .41 eps; while LEXR Q3 numbers should be 93.4 M and .09 respectively. At least 1 analyst has opined that he/she felt LEXR is taking share in the removable storage media segment (whether from SNDK or other more minor players I don't know). CEO Stang has stated the same. LEXR is #1 in the key chain drive segment. They also sell a 4gigabyte memory camera card. New market targets will be the disk drive space. A 128 Mg key chain drive could replace 88 floppys. Retail exposure for LEXR has gone from 13000 stores in 2002 to
over 40000 in 2003 (as of August)
The stock was recently roiled by the news that Samsung was going to start manufacturing Memory Sticks for SNE. An analyst then opined that LEXR was more exposed to that competition than SNDK and the stock sold off. The fact that Samsung was going to enter this market did not seem to bode well for LEXR since Samsung furnishes LEXR its wafers for flash supply. SNDK while having less exposure to the memory Stick (about 6-7% of sales), it also has a dedicated flash supply through its JV with Toshiba. SNDK also is more diversified into mini-SD,USB flash drives, xD-Picture and the Memory Stick.
The concern over wafer supply would seem to be a non-event since LEXR has guaranteed supply contract with Samsung and Samsung has about a dozen fabs on stream or close to coming on line. Samsung's entry into the Memory Stick arena would seem to be more troubling since LEXR does depend on Memory Stick sales for about 30% of sales. While Stang says that Samsung's entry will open the market acceptance and drive sales for all producers of the Memory Sticks, I can't help but think that he'd rather they hadn't come in. Can overall market growth for removable media make up for possible incursions into one of LEXR's main revenue drivers? That is the question....
One other factor should be considered in the investment (if it is an investment) process and that is the price paid for the stock. While LEXR's share price is certainly lower than SNDK's
on a dollar price basis; actually SNDK trades at a lower P/E and given it's higher growth rate, a lower PEG. If it's a trade...and then pick whats moving. Fundamentals are definately less of a factor in a trade....just trade what your T/A tells you.
Anyway, thats my .02, Rob
OVTI.....I don't know how many of you listened to the conference call but for what it's worth, here are some points they covered:
They posted .23 diluted earnings but if they excluded about 340k in previously written off inventory that number would have been .22. There remains about 5M of written off inventory in the company, but there is no guarantee that it will be sold.
Last Q they sold off over 1 M of written off inventory vs 340k this Q.
Gross margins are flatish 37% vs 36.8% (absent the inventory sales)which they anticipate will be around 37% again in Q2.
Their biggest sales growth in the quarter was from digital still cameras which went from 41% of revenues in the prior Q to 49% in this reported Q.
Cell phone camera sales were down to 23% of revs vs 28% last Q with an overall slight downturn in revenues due to the product transition from add on mudules to embedded cell phone cameras.
R&D expenses flattish
SGA expenses are up to 4.5 M and 9.7% of revs from the prior Qs 3.1 M and 7.8% of sales the prior Q. They attribute this to higher legal costs from litigation (which will continue for another couple Qs they estimate)and start up costs associated with overseas operations.
For Q2 they see healthy demand though their customers don't have great visibility and that OVTI considers their challenge to keep up with demand.
Their design wins are 50 different camera phones from 18 different manufacturers of which 16 models are currently shipping. The rest of the 50 should come on line within the 2003-2004 time frame. OVTI now counts 4 of the top 5 branded cell phone manufacturers as their customers. It was their impression from industry sources that cell phones with embedded cameras will make up about 36-37M units out of the 400M units estimated to sell in 2003.
Game sales due to the SNE PS2 rollout in Europe went from 8% of sales to 12%. North America will rollout in the next 2Qs in anticipation of Xmas. (As I recall...I believe that SNE sells about 20 M PS2 units/year?)
Japan which uses the competing technology CCDs are a market they hope to open and with OVTI's CMOS technology they feel that market is opening due to cost, size and power advantages vs CCDs.
They upped revenue guidance to 48-50M (consensus 48M)and eps slightly from consensus numbers for Q2 to .22-.23 diluted (consensus .21)
OVTI does not see a post Xmas slowdown as of this time due to increasing market size growth especially in digital cameras and gaming.
OVTI is designing automotive applications which may start to come to market in the 2004 calendar year timeframe. The total market for auto applications should they all be implemented would be about 20 cameras per auto and approx 1 B cameras thoughout the industry.
They do see future growth (at least 6 months out) in the PC camera sector as more interactive chat from sites like AOL and Yahoo come to fruition.
Drivers for OVTI's growth nearer term remain still cameras, cell phone cameras and gaming in that order.
Hope this is accurate. I listened 2xs in order to double check but I may have heard/misinterpreted incorrectly. Please do not trade/invest based on this report. The CC is archived for those who want to listen. Rob
OVTI's CC will certainly be interesting. They are going through a product transition on camera phones; from add on modules to integrated camera phones. On the last CC they estimted that they would be out of the add on market within 6 months (of that CC). They indicated "several" design wins from companies that had purchased the add on cameras to buying the integrated sensors. BUT no names were given. I believe that MOT and SNE/ERICY are 2 customers that are transitioning with OVTI. Anecdotally, SNE/ERICY has been gaining market share in cell phones largely based on their offerings of color screens and integrated cameras. MOT....who knows....they are to rollout at least 12 new models for the China market (many with camera phones)but are they ramping as projected? Another item of interest will be gaming growth (which is not widely followed). Last qtr, OVTI went from 1% of sales to 8% of sales on the basis of SNE's rollout in Europe of a PS2 with OVTI cameras. North America was to be next. I would think that this market is at least as large as Europes.....but how is the rollout going? Finally, are they going to name names as far as current and new design wins for cell phones? It will be an interesting call. Finally, LENS just reported well especially with their digital Polariod line (OVTI) which bodes well for continued strength in the digital camera sector as well as the fact that digital cameras have outsold film cameras in the recent past. FWIW, Rob
By "enterprise class" I believe they are talking about servers and storage systems sold to mid to large size companies rather than the small or home office type products. FWIW, Rob
OT On Maui...go to the Swan Court restaurant in the Hyatt....very nice romantic place to have dinner...also Moose McGillicuddy's in Lahaina a nice place for breakfast.
Wish I was there. Rob
Joe...re short shares from Schwab. In the past when I think I may be shorting a stock that I know are hard to get, I reserve/ ask them to find some for me premarket. If they can borrow some, they call me and reserve the shares for me to short. The window for me to short usually closes by 2:00pm cst. If I dont use them, I lose them by then. I find if you wait much after the 1st hour after the open it's often too late for them to get you shares. Rob
On the other hand....(from the EE Times) analysts are saying that Toshiba and Samsung are no longer battling on price in the NAND (Flash memory like that made by SNDK and LEXR) market. M-Systems spokesman is saying that lead times are now stretching out to 3 months whereas earlier this year customers were able to get immediate delivery. Toshiba is basically shippping on allocation and NAND deliveries are stretching into the 4th quarter, Samsung says there is a 15-20% NAND
shortage over available supply and that they are also putting some of their customers on allocation for some densities of NAND. I had heard that SNDK said on their CC that they were capacity constrained also. Given all this talk of shortage,
will LEXR have a problem in using their capacity even if they lose share on SNE's business?
I don't have any position in any of the stocks listed above, though SNDK at 52....shoulda woulda coulda.....Rob
SMSI got a contract from VZ to make a software solution for roaming between WiFi hotspots and VZs cell service. This has beeen speculated on (the contract) for a while...being brought to my attention in a Business Week article about a month or 2 ago. This would be a big break through for SMSI...a company with 56 employees....which reported recently a profit diluted for .01 for the prior quarter. Rob
Zeev...you have an opinion on GRMN for a DCB? Thinking yesterday was overdone. TIA, Rob
Congrats John,I am glad for you. Just giving you my take on the transaction. I had been hearing that ISIL had been under pressure from both BRCM and INTC. For the record I dont have any position in any of the 3.
Rob
John ISIL sold their WLAN biz to GSPN because they were feeling alot of heat from INTC and BRCM. They looked like the 3rd player because BRCM tends to be the low priced vendor due to their CMOS approach and INTC has huge economies of scale.
I don't know why ISIL would sell the "gem" of the business and the market treat the sale as a positive for the company. You will notice that ISIL is UP in a down market on the news. Maybe GSPN has a special sauce to add to the mix but I'd be careful here with that thesis. FWIW, Rob
OT Phill, the girl who played in Catch Me if You Can was Jennifer Gartner(sp) from the TV show Alias. I like Jennifer Connally better Rob