Thursday, August 7, 2008


There is no mystery to SNDK's problems: it is the supply of NAND flash memory, particularly from Asian suppliers like Samsung, over the last year as the market has been flooded with chips and pricing has been horrific.

We didn't sell after the July report either, since Eli Hariri and company guided to a "0%" gross margin. It is hard to believe it could get any worse than a 0% gross margin.

We haven't sold a share of SNDK since we've written about it, even though SNDK's cash position fell $600 ml in the second quarter, and cash flow from operations was a -$327 ml. S&P cut SNDK's credit rating to "Single-B" after earnings, so we are watching it closely.

When Hariri was asked in an interview whether this was the worst environment for NAND flash he'd seen, he said no, he'd seen far worse.

Position: We remain long SNDK, TXN, Intel

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