Why SanDisk Should Be Avoided
On Friday and Monday, SanDisk's highs touched a nine-day moving average line that resembles a triple black diamond with skull and crossbones ski hill in Tahoe. There is a reason the aid station in Olympic village has more than one doctor on staff, and it's the same reason why SanDisk should be avoided.
You don't have to take my word for how much peril SanDisk stock has, you can read what SanDisk's CEO has to say about the company. In the last conference call.
In a nutshell, forget about any happiness coming in the second quarter for 2012, and if luck is on SanDisk's side things may look brighter by the end of the year. If not, well maybe 2013 could be the year. However, unless you feel a need for continued portfolio pain, letting the next quarter's report for this quarter do it's damage without you may be smart damage control.
Many are likely to agree SSD drive technology is going to displace physical rotating platters at some point, albeit not soon enough to have a meaningful impact on 2012. Even with greater storage sales, it may not help shareholders looking for the stock price to recover.
As I wrote in part in my article about Sprint(S) , smartphone growth is maturing and expectations of continued expansion at previous rates may not be easily achieved. The maturing of American and European smartphone markets are augmented with Asian growth as was recently reported by Apple's(AAPL) sales of iPhones in China. If SanDisk is unable to perform now based on Asian growth, it's difficult to see the situation changing soon.
Another problem SanDisk faces is cloud computing and wireless internet technology. A great example of this is with cameras. Instead of buying increasingly larger size and faster memory for cameras, consumers are able to connect cameras to wireless networks for content storage. Using technologies including Bluetooth doesn't remove the need for memory cards, but as we can clearly see with the last reported quarter softness in the demand can have a very direct and painful impact on the stock price.