Hello, Zeev. The CC sounded quite positive to me, if there was a negitive I picked up, it was that SNDK was not going to have enough supply and thus would have to go to "non-capitive" supply sources. I just got back myself and intend to do some more research regarding wiser interpretations of the CC than mine.
Zeev, just did some research on SNDK CC and wanted to give you a link I found--I did like what Steviee gave you but this is another 200 word slant on the situation:
Commodity product + increased industry capacity + shortfall in demand from the digital camera market = brutal price war and collapsing margins. Here it is in 200 of Sandisk's own words:
Quotes are from the CCBN StreetEvents transcript:
Third quarter revenue of $408 million, up 45% from Q3 of last year and down 6% sequentially, was less than we had forecast... significant increase in supply and some softening in digital camera sales… price cuts… sequential decline in our average selling price per megabyte was 22%, compared to 16% in the previous quarter… Units sales grew 11% sequentially with a 16% decline in ASP per unit. Gross margin for the third quarter was 36.1% compared to 41.2%
In the fourth quarter we expect a further decline of approximately 30% in the average price for megabyte at the card level... Q4 total revenue forecast of 500 to 530 million… gross margins to be in the range of 27% to 30%. This reflects our anticipated decline in ASP per megabyte, offset by cost improvements from our 200 millimeter 90 nanometer supply, margin improvements from a shift to higher capacities, as well as some benefit from amortizing fixed costs over higher volumes.
We believe that in the fourth quarter we will deliver flash music players with respectable storage at unprecedented consumer price points… we think that that will move a lot of higher capacity cards.
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