SanDisk Defies Gravity (SNDK)
Shares of the flash memory maker are up 51% this year in comparison to the NASDAQ which is essentially flat. Sandisk's business is seen as a commodity business, with flash having boom and bust cycles. It is generally thought to be in a boom cycle now and as such, shares of Sandisk are benefiting from it.
For every boom though, there is a bust. Sandisk spoke on this and said according to The Motley Fool article, "SanDisk highlighted how it's benefiting from very favorable conditions. First, memory demand of all types is soaring. Second, the company is advantageously positioned to supply that memory in the booming mobile device segment. How big is the mobile opportunity? From 2005 to 2009, the mobile end market increased from 25% of SanDisk's sales all the way up to 49%." Sandisk has an advantage over its competitors, such as Intel (NASDAQ: INTC) and Stec (NASDAQ: STEC) as it licenses its technology to its competitors. SanDisk collected 12% of its revenue from these royalty payments in 2009.
As the mobile internet and solid-state drives (SSD) stories continue to thrive, Sandisk and its shareholders should continue to benefit.
Shares of Sandisk are up $1.50 this afternoon, trading at $45.20.
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