Tuesday, September 19, 2006

Calls of Note Part 1

- Citigroup comments on August NAND Flash NPD Data saying industry's 16% card/drive/MP3 bit growth was the best in four yrs, fueled by an above-seasonal 68% mm increase in USB drive units. Revs increased 5%, outpacing norms by 200 bps. Data underpins field work suggesting solid QTD sales and lean retail finished goods inventories.

Sandisk (NASDAQ:SNDK) Sustains Momentum. 19% mm bit growth nearly 2x norms, fueled by MP3 and memory card unit share gains as well as an 8% average density increase. USB drive sales disappointed on market share (-900 bps) despite unit growth 5x SanDisk's August avg. Overall, data reinforce firm's conviction that SanDisk's 3Q06/4Q06 has more upside than downside risk to ests.

Looking ahead, investors should focus on product news flow at IDF (PCs) in late September (26th to 28th) and on takeaways from Citi's upcoming trip to Asia that same week.

Notablecalls: Not actionable but good to know category

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