At its analysts day, SanDisk Corporation (Nasdaq:SNDK) exuded as much confidence, both for the long and short term, as I've ever seen.
Before I get to all the information supplied by Sandisk executives, I wanted to point out, with great satisfaction, that Sandisk has never been as "Israeli" as it is today. It is led today by seven executives, of whom five are Israeli, including founder and CEO Dr. Eli Harari, and his deputy executive VP OEM business and corporate engineering Yoram Cedar. Three others came from msystems, so that I have no doubt that Sandisk's acquisition of the company from Dov Moran three and half years ago has contributed a lot to Sandisk.
The name of one OEM customer ran like a scarlet thread throughout the presentations: Apple, which has apparently become very big for Sandisk. It is important to emphasize that in no place was it confirmed that Apple buys directly from Sandisk, like Lazard analyst Daniel Amir writes as a clear fact.
The title for the analysts day was, "Over the next decade flash will be bigger than you think." CEO Harari warned at the opening that they were going to say very, very optimistic things about flash memory over the next decade, and that possibly some of the forecasts will not come true, but that this is what Sandisk management thinks today.
Harari estimates that just like today, NAND flash storage technology in media players like the iPod is a fact, and very soon those players which still work on hard disks with movable parts will depart the world, so too in a few years flash (SSD) memory will become the default for laptops, tablets, and netbooks.
Harari related that Steve Jobs turned to him before the launch of the first iPod, about a decade ago, and without revealing what gadget he was planning, asked that Sandisk propose a flash solution at an economical price compared to a miniature hard disk that Toshiba offered.
Harari explained to Jobs then that the difference in prices was about 4-5 times, so that it was not possible. But in 2005, after the sharp fall in flash prices and improved technology it became possible, and Apple launched the first flash-based iPod Nano, and the rest is history.
At a certain point in the coming decade, this point of no-return will apparently be reached as well in the area of data storage in laptops, because flash prices fell and there will be dramatic technological improvements, including in the production process.
Apple is also the one that forged the way for Sandisk and other flash producers in the smartphone market, when in the course of two years it raised the NAND flash level in the iPhone from 4GB to 32GB, and based on market rumors the next device it launches will have 64GB. It also went with flash for its iPad, and analyst Amir is convinced that Sandisk's product, the iNAND, with 32GB storage, is in that computer.
Sandisk believes that those two devices, the iPhone and iPad, and their present and future competitors, are in essence the new computers for the coming decade, so that flash has tremendous potential. Throughout the presentations, Morgan Stanley analyst Mary Meeker, an Internet expert and the only one who survived the bubble bursting, was mentioned. Meeker says over the coming decade, mobile Internet will be "much bigger than you think." That was Sandisk's source for its title, that flash will be bigger than you think, because it is the ideal solution for portable storage, and it is also the most expensive part today in the iPhone.
Sandisk managers left the best part for Friday evening, for CFO Judy Bruner , who spoke just as trading in New York was finishing up. Investors knew that in recent years, in the conference calls right after the results, she was generally the "party pooper", because she nearly always supplied guidance that was short of estimates, and the share would collapse.
This time, no one thought that there would be a change in the guidance that was issued only about a month earlier, but people nonetheless breathed a sigh of relief when trading ended with a gain of 2%, with no disturbances by Bruner. But minutes after the close of trade, she surprised everybody, when she put up the slide that showed a raised forecast for revenue and gross profit in the first quarter, which should lead analysts to revise upward the numbers that they had in their models before the conference, and apparently led Sandisk shares to jump over 11% yesterday.
Published by Globes [online], Israel business news - www.globes-online.com - on March 2, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010