15 October 12 18:38–Among the technology companies that I hold in my portfolio here, two will report this week: Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) after the close tomorrow, and SanDisk Corporation (Nasdaq:SNDK) after the close on Thursday. I expect a third quarter better than the estimates for both of them, and also guidance better than the estimates for the fourth quarter. For Mellanox, this is fairly predictable, as the continuation of a wonderful year, but as far as SanDisk is concerned there are still those who doubt to what it extent it has really emerged from the difficult crisis of the first half of the year.

With Mellanox, although it will not disappoint, I fear a classic “sell on good news” reaction in the short term. This is because there is no chance of it beating the estimates by a long way as happened in the first two quarters of this year. Then, the company’s share price jumped by tens of percentage points twice, on the April and July results releases.

It seems that Mellanox’s management is also aware that overly high expectations are problematic, and so it has called a special analysts day for this Friday, at which it will amplify on the high demand for its solutions in the Big Data market, for HPC (high performance computing) and cloud computing environments.

In my view, for the first time in many years, SanDisk approaches its results and guidance day with the potential for a “perfect storm”, but a positive one this time. This will be the first holiday season in which it has a presence in the best-selling product, the iPhone 5, of the highest flying company, Apple (AAPL), and perhaps also in the iPad Mini to be launched this month.

SanDisk also gains from the success of its own and Apple’s rival Samsung, because it collects royalties on the NAND chips that Samsung manufactures, and in addition Samsung sells its storage solutions.

If early in the year SanDisk crashed together with Nokia, HTC, Motorola, and others, which were hit by the success of Apple, now, not only is it in Apple’s court, but those other customers are also launching a great many new products for the holiday season. A very important element of the “perfect storm” is the recent turnaround in prices of NAND chips as a result of a freeze on new investment and/or reduction in production capacity on the NAND lines at all the producers…Read More>>

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