SanDisk CorporationSNDK

Morningstar Rating

Stock Research and Analysis

by John Ayling

Despite SanDisk's strong intellectual property and integrated business model, we think the commoditylike nature of the flash memory market makes the company a risky investment.

SanDisk is a leading producer of NAND flash memory products, which store Read more

Bulls Say

SanDisk is the holder of key NAND patents for both raw chips and memory cards. In general, if a company sells NAND chips or memory cards, it is putting money in SanDisk's pocket.

The NAND technology in which SanDisk-Toshiba specializes has a higher storage density than that manufactured by competitors. This translates into lowered production costs and thus higher margins.

Solid state drives, which may replace traditional hard drives, are a strong long-term growth opportunity for SanDisk. Read more

Bears Say

Flash memory cards are essentially commodities, and as such, they generate low margins and experience intense price erosion.

Though the licensing relationship with Samsung has historically been a key source of profitable revenue for SanDisk, the recent renegotiation of the agreement has resulted in less favorable terms. The fixed royalty rates that Samsung will pay to SanDisk will be about 50% lower than they were under the previous arrangement.

Samsung is a particularly tough competitor in the memory industry and the firm has more financial resources than SanDisk to invest in technology Read more

Strategy

SanDisk plans to use its technological leadership in digital storage and its retailing clout as a base to become a major player in consumer electronics. As a start, it has begun pouring more marketing Read more

Management

SanDisk's cofounders, Eli Harari and Sanjay Mehrotra, are chairman/CEO and president/COO, respectively. They were the authors of many first-generation NAND patents and have worked in various technical and management positions at SanDisk since the firm Read more

Profile

SanDisk is a global leader in NAND flash memory cards. Its products are used in a number of consumer electronic devices such as digital cameras, mobile phones, and USB flash Read more

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