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Thursday, October 23, 2008

Micron and Sandisk

Look. The memory business blows. It's terrible. Everyone in it is struggling to stay alive. There's a lot of focus on the demand picture because of the impending depression.

Historically, you buy these stocks on giant capacity reductions. We're seeing them in unprecedented droves. We also saw expansion to the upside on unprecedented levels so there's probably more coming down the road. At some point, these stocks will start to respond to it -- the ones that will survive, that is.

Sandisk trades at a 2 billion dollar market capitalization here. They pull down 500mm a year in royalties alone.

Samsung is likely to slash their capex forecast by 50% soon. When that happens, I kind of think the memory producers will rally. That's what used to happen before everything was going to zero, anyway.

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