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Monday, October 23, 2006

Maybe Sandisk Won’t Compete With iPod


Sandisk’s stock dropped 20% on Friday, all the way down to $49.15. It has traded as high as $79.80 over the last year.

Sandisk makes NAND flash memory which is used to store data on MP3 players and cell phones. But, according to the company, pricing in this segment of the tech industry is very soft, which could mean that Sandisk’s ability to make money could be severely undermined.

The problems at the company reopen the issue of whether Sandisk can effectively compete with Apple’s iPod. A few weeks ago, Sandisk, RealNetworks and Best Buy said they were going to make a major push into Apple’s territory.

But, two things have changed. One is that Sandisk’s core business of making NAND flash memory is faltering. The other is that Apple is doing better than most investors thought it would

Apple’s iPod shipments in the last quarter were up 32% over the same period a year ago and hit 8.1 million units.

If Sandisk is so troubled, and it is, maybe it should leave someone with a lot of money like Microsoft take on the iPod. Sandisk needs to stick to the knitting.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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