Robert W. Baird & Co. is reporting that their “checks indicate very weak NOR flash-memory bookings for the month of December, in sharp contrast with the third quarter, and suggesting a drastic reduction in lead times,” Tristan Gerra, Dylan C. Moore and Scott Hirleman report for Barrons.
“NOR flash trends tend to correlate with other commodity products such as low-end analog and 8-bit microcontrollers. Several semiconductor companies are already implementing tight expenses control and/or hiring freezes, also per our checks,” Gerra, Moore and Hirleman report. “In NAND flash, we are getting additional feedback about weak iPod 8-gigbyte nano sales, suggesting further pricing weakness in November. Following our estimate reductions on 11 semiconductor names last Tuesday, we are today downgrading STMicroelectronics shares to Neutral from Outperform and reducing our estimates and price target on SanDisk.”
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As many expected, and most probably as Apple intended (due to possible 8GB flash memory supply constraints and/or enticing people to get a video-capable iPod unit), $249 for an 8GB iPod nano vs. $249 for a 30GB iPod is a perfect recipe for cannibalization of 8GB iPod nano units by 30GB iPods.
[UPDATE: 1:04pm EST: Added “due to possible 8GB flash memory supply constraints and/or enticing people to get a video-capable iPod unit” to “Take.”]