SanDisk Corp

The semiconductor industry requires huge investments, making it a capital-intensive industry. On average, equipment needs to be replaced each three to five-year time period.

NAND Flash sales were up 35% for the first six months of 2014, as volumes increased amid a 17% fall in average selling prices or ASPs.

The gross margin for SanDisk (SNDK) has been declining year-over-year from 49.35% in 3Q13 to 46.79% in 3Q14 and 41.51% in 3Q15.

In July 2015, Micron and Intel companies announced 3D XPoint, their revolutionary non-volatile technology with cross-point structure.

SanDisk (SNDK), which was eagerly looking for a buyer, found one in Western Digital (WDC). WDC agreed to buy SanDisk for $19 billion.

Micron expects DRAM demand to grow at a CAGR (compounded annual growth rate) of 20%–25% between 2016 and 2019, driven by migration to advanced technology.

Blue Ridge Capital is a New York–based hedge fund founded in 1996 by Tiger Cub John Griffin. The fund generally targets “absolute returns” by investing in and short-selling companies.

Micron Technology (MU) forecasts that 16% of the mainstream server market would be equipped with 3D XPoint by 2020.

NetApp’s cash-to-debt ratio in 1Q16 was 3.33x—higher than the 1.36x industry median. Its operating income was -$26 million.

The financial stability of a company is determined by understanding its debt level and its capability to meet long-term and short-term debt obligations.

As of September 3, 2015, Micron had $5.6 billion of cash and marketable investments.

KLA-Tencor constitutes ~2.4% of the iShares PHLX Semiconductor ETF (SOXX) and 0.84% of the VanEck Vectors Semiconductor ETF (SMH).

As of November 20, Western Digital Corporation (WDC) generated investor returns of -39.32% in the trailing 12-month period and -11% in the trailing one-month period.

The peers outperformed Micron based on the current ratio, PE ratio, and PBV ratio. The ETFs outperformed Micron based on the price movement, PE ratio, and PBV ratio.

On October 2, 2015, Apple closed the trading day at $110.38. Based on this figure, it traded below its 100, 50, and 20-day moving averages

By acquiring SanDisk (SNDK), Western Digital (WDC) aims to improve its market standing as a supplier that could reignite new pricing pressure in the storage market.

Micron’s stock has surged on bullish earnings prospects, and it’s up more than 200% since the beginning of 2013, partly propelled by the acquisition of Elpida last year.

JAT Capital sold its position in SanDisk Corporation (SNDK) in 4Q14. The position had represented 1.2% of the fund’s third-quarter portfolio.

Micron and Intel have developed 3D XPoint in a way that benefits from both DRAM (dynamic random access memory) and NAND (negative AND).

While the Western Digital-SanDisk merger brings together the third and eighth players, respectively, in storage (which usually isn’t problematic from an antitrust standpoint), regulators can get very granular when they define submarkets.

Semiconductor manufacturing is complex and involves design, fabrication, assembly, and testing. Building a fab requires investments of $3–4 billion.

Intel generated TTM returns of -16.66%, 9.26% in the trailing one month. It generated -20.03% YTD. Its share price fell by 1.53% in the trailing five days.

These improvements require larger capacities for both code and data storage and significantly faster erase and write times. NAND offers both of these at relatively low cost.

At present 3D NAND is less efficient than 16-nm, but it is expected to surpass 16-nm in the future. Thus, Micron will see expansion in its gross margins from the NAND business.

After the announcement of its fiscal 1Q16 earnings, SanDisk stock rose by 0.8% to $76.50 on April 28, 2016. However, the very next day, the stock fell.

To acquire SanDisk, Western Digital has offered SanDisk shareholders $86.50 per share. This is approximately 15% premium to SanDisk’s closing share price on October 20, 2015.

In the SanDisk-Western Digital merger, Western Digital is paying about 2.6x trailing-12-month revenues and 10.6x trailing-12-month EBITDA.

John Griffin’s Blue Ridge bought a stake in Apple Inc. (AAPL) last quarter. The stock accounts for a 1.85% position in the fund’s portfolio.

Point72 reduced its position in Micron Technology. It sold 4,792,200 shares during 4Q14. The shares accounted for 0.28% of the fund’s total 4Q14 portfolio.

IBM’s 2Q15 results marked 13 straight quarters of falling revenue. This trend continued in fiscal 3Q15 when IBM failed to report any revenue growth.

SanDisk (SNDK) was founded in 1988. It’s a pioneer in flash memory technology. It designs, develops, and manufactures NAND flash memory storage solutions.

Owing to China’s keen interest and demand in the semiconductor space, a China-based conglomerate would be an interesting choice to acquire SanDisk.

Cash-to-debt ratio measures a company’s financial strength. Apple’s cash-to-debt ratio in 3Q15 is 0.6x, which is lower than the industry median of 1.4x.

Samsung (SSNLF) started mass production of 3D V-NAND flash memory chips in May 2014, giving it the advantage of being a first mover.

Western Digital reported 4Q15 revenues of $3.2 billion—a 10.11% decrease compared to 3Q15 and 12.59% lower than its 4Q14 revenues.

NetApp offers data management and storage systems, software, and services. NetApp increased its stock repurchase program by an additional $2.5 billion.

SanDisk (SNDK) is considered a pioneer in flash memory. As the cloud is increasingly adopted for data storage, consumers and enterprises are likely to opt for SSDs rather than HDDs in new systems.

As of the end of December 2015, Micron Technology has generated YTD returns of -59%, compared to 61% in 2014.

Micron revealed plans to transition from planar NAND flash to 3D NAND flash, with volume production targeted for fiscal 2015 with planar NAND scaling slowing down and reaching its limits.

Western Digital generated $488 million in cash from operations in 4Q15, ending with total cash and cash equivalents of $5 billion.

Seagate’s shares fell by 13% in the week ending January 22, after Mizuho cut its price target for STX from $38 to $32 and provided a “neutral” rating.

One of Western Digital’s top shareholders, Alken Asset Management, opposed the merger in its open letter to Western Digital’s board.

In fiscal 3Q16, Seagate reported revenues of $2.6 billion and a gross margin of 20.2%. Its net loss was $21 million, with diluted EPS of -$0.07.

Western Digital (WDC) and Seagate have cutthroat competition in the HDD (hard disk drive) space, with the former accounting for a 43.6% share and the latter for a 40.1% share.

In fiscal 2Q16, Applied Materials’ (AMAT) revenue was almost flat at $2.45 billion, beating the analyst estimates of $2.43 billion.

Samsung has started mass production of 3D-NAND flash memory and has gradually increased its market share in this segment.

Although high-end smartphones and tablets will bring significant revenues for SanDisk, the company expects the SSD division to benefit more than its embedded segment will.

Out of 23 analysts covering Apple stock, 40 have a “buy” recommendation, two have a “sell” recommendation, and 13 have a “hold” recommendation.

If it’s true that Apple is changing its preference to Samsung, SanDisk will lose a very important customer, which will negatively impact SanDisk’s top line.

The Technology, Hardware, and Storage subsector generated returns of -0.97% in the last week, compared with 0.69% for XLK. As a whole, the subgroup is trending down due to lower demand for computers.

EMC houses storage, server, cloud, and big data under its business model. But IDC predicts that third platform technology will grow by ~20% by 2020.

In light of the changes in the business and capital markets, Alken is urging Western Digital to back out of the merger by paying a $184.4 million termination fee.

The data storage market is growing rapidly with the emergence of the cloud. Like Intel, Micron has been increasing its exposure in the storage space.

Increased contribution of the embedded solutions segment towards SanDisk’s overall revenues is a positive sign.

In September 2014, SanDisk (SNDK) released the Extreme Pro SDXC memory card, which is the world’s first Secure Digital card with storage of 512 gigabytes of data.

Cloud storage has opened up a plethora of opportunities for SanDisk, as cloud storage is completely dependent on flash drives to be super fast.

For the nine months ended FY14, SanDisk’s commercial channel contributed 67% to the company’s overall revenues.

In fiscal 3Q16, Micron’s SBU (Storage Business Unit) revenue fell by 20% on both a year-over-year and quarter-over-quarter basis to $719 million.

Marvell’s rich patent portfolio makes it an ideal acquisition target for China, which is looking to acquire multinational semiconductor companies.

Let’s dig into the cause of Marvell’s accounting issues, see how one thing led to another, and look at how its new management plans to untangle the chaos.

Micron is moving a step further and developing 3D NAND Generation 2 technology. It expects to bring this into production in fiscal 2Q17.

Broadcom’s non-GAAP interest expense rose threefold from $41 million in fiscal 1Q16 to $150 million in fiscal 2Q16.

Hewlett-Packard (HPQ) generated investor returns of -14.1% in the trailing-12-month period and 4.8% in the trailing-one-month period.

Revenues and operating expenses In fiscal 4Q16, Western Digital (WDC) expects revenues in the range of $2.6 billion–$2.7 billion. The firm expects its gross margin percentage to improve compared to fiscal 3Q16. It also expects operating expenses of $475 million in 4Q16. Excluding the impact due to the interest expense from debt financing related to […]

Applied Materials expects memory spending to remain flat on a YoY basis. But it expects spending to shift from DRAM to the nonvolatile flash memory NAND.

The SanDisk (SNDK) and Western Digital (WDC) merger is expected to create a company with nearly $20 billion in combined revenue.

On April 29, 2016, Western Digital (WDC) announced its fiscal 3Q16 results. It reported revenues of $2.8 billion and net income of $74 million, with earnings per share of $0.32.

SanDisk started its business with removable products. The segment is one of its growth drivers and commands the largest share of its overall revenue.

SanDisk’s product mix consists of five segments: removable, embedded, enterprise, client SSD (solid state drive), and other. The company earns most of its revenue from removable.

In fiscal 1Q16, SanDisk’s (SNDK) revenue rose 3% YoY, topping analysts’ estimate and its own guidance. This was the first growth after four consecutive quarters of decline.

This earnings season is full of surprises for the semiconductor industry. SanDisk (SNDK) has now posted surprising results for fiscal 1Q16, which ended April 3, 2016.

Dell is planning to sell ~$9 billion of unsecured junk bonds backing the EMC Corp. (EMC) acquisition. Dell is largely expected to pay an interest rate of ~10% unless there is a major improvement in the bond market.

While Intel (INTC) has been focused on its computing and data center revenues, its IoT (Internet of things) revenue grew significantly in 1Q16.

SHRAX’s assets were invested across 76 holdings as of March 2016, one less than a quarter ago. It was managing assets worth $12.6 billion as of March’s end.

Western Digital and Seagate account for 80% of the global HDD market. In the last few years, the HDD market has shrunk, while the SSD market has expanded.

Recently, Seagate Technology (STX) announced its preliminary earnings results and lowered its revenue and margin estimates for fiscal 3Q16.

On a non-GAAP (generally accepted accounting principles) basis, Micron Technology’s gross margin fell from 34% in fiscal 2Q15 to 20% in fiscal 2Q16.

Micron Technology’s fiscal 2Q16 revenue and fiscal 3Q16 guidance fell short of analysts’ estimates. The company expects growth to pick up in fiscal 2H16.

Micron is differentiating its 3D NAND flash technology from that of peers. But the ScanDisk-Toshiba joint venture says its 3D NAND offers more capacity.

For 2016, Micron has set aside ~$5 billion in capital expenditure, of which ~$800 million is to be spent on one facility in Singapore and one in Idaho.

Micron expects DRAM supply to grow in the range of 20%–25% in 2016 and then to slow to less than 20% in 2017 because technology is reaching scaling limits.

Micron Technology expects NAND demand to grow at a CAGR of 40% between 2016 and 2019, driven by reduced costs and the higher performance of 3D NAND.

From a purely NAV (net asset value) return standpoint, the Vanguard Capital Opportunity Fund has had a forgettable one-year period until March 18, 2016, as it stood tenth among its peer group.

While Micron Technology (MU) expects growth in memory content could drive future growth despite the slowdown in the consumer market, it continues to invest in breakthrough innovation.

Micron is aggressively expanding its 3D NAND capacity. It aims to spend up to $2.5 billion of capital on ramping up production of 3D NAND Gen 1 and starting manufacturing of the Gen 2 chip.

The merger was as a breather for SanDisk shareholders. They have been facing lower share prices after the price fell by 24% between March 20 and March 26, 2015.

The overlap of products and customers between SanDisk and Western Digital would help reduce $180 million in operating expenses over the next 18 months.

The merger will create a company with nearly $20 billion in combined revenue. It would be able to capitalize on the enterprise storage products market.

Unisplendour backed out of the deal to acquire a 15% stake in Western Digital for ~$3.8 billion. Investors wondered if the merger deal would come through.

Shareholders’ verdict is out. Both Western Digital (WDC) and SanDisk (SNDK) shareholders approved the $17 billion merger.

Weaker shipments of smartphones, tablets, and notebooks also resulted in a 10%–11% drop in prices of eMMC and SSD (solid state drive) products in 4Q15. Revenues of the global NAND flash industry fell 2.3% quarter-over-quarter in 4Q15.

Last week, Tsinghua Unigroup’s subsidiary Unisplendour announced that its board of directors decided to terminate its investment plan in leading data storage company Western Digital (WDC).

Alken stated that in light of changing market dynamics and the capital market scenario, the $19 billion price for SanDisk, which has been posting declining earnings in fiscal 2015, is too high.

The ClearBridge Aggressive Growth Fund – Class A (SHRAX) had $12.1 billion worth of assets under management at the end of January 2016.

SanDisk and Texas Instruments joined the fray and reported their fiscal 4Q15 earnings on January 27. Explore this series for performance and growth prospects.

Samsung (SSNLF) accounts for 30% of the NAND flash market as of 3Q15. Other players in this space include Toshiba (TOSYY) and SanDisk (SNDK).

SAP will announce its fiscal 4Q15 results on January 22, 2016. On January 11, 2016, SAP reported preliminary revenue of 6.4 billion euros.

EMC (EMC) generated investor returns of -15.1% in the trailing-12-month period and -5.9% in the trailing-one-month period.

ClearBridge Aggressive Growth Fund’s top ten equity holdings in December included UnitedHealth Group (UNH), Comcast (CMCSA), SanDisk (SNDK), Broadcom (BRCM), and Anadarko (APC).

Though it failed to report revenue growth, IBM’s revenue and EPS of $22.1 billion and $4.84 beat analysts’ expectations by $20 million and $0.03 per share.