Needham & Company Leans More Toward Sandisk (SNDK)/Micron (MU) Deal Versus Sandisk/Western Digital (WDC)

Despite countless rumors over the past few day, Needham & Company analyst Richard Kugele is not convinced about a Western Digital (NASDAQ: WDC) takeover of Sandisk (NASDAQ: SNDK). saying there are too many issues including MOFCOM approval of HGST integration to regulatory sign-off on the Unis investment.

Kugele listed the following arguments for and against a SNDK/WDC deal:

For: 1) Ally on the Board of SanDisk; 2) access to NAND supply, strong SSD brand presence; 3) large cash raise (assuming approval) could be used for M&A.

Against: 1) MOFCOM hasn’t approved the HGST integration yet, nor have regulators signed off on Unis/Tsinghua’s 15% investment in WDC (i.e. the cash isn’t in the bank yet); 2) Historical relationship with Intel on enterprise SSD controllers/MU on NAND (plus INTC’s investment in Tsinghua) complicate a SNDK tie-up; 3) Is NAND even the future of non-volatile memory, and will SNDK lead that charge or will significant investment be needed? Who owns what with the Toshiba relationship (would Toshiba sign off)? What does next year look like for SNDK if Samsung doesn’t renew NAND license?

While Kugele says stranger things have happened, he leans more toward a Micron Technology (NASDAQ: MU)/Sandisk (SNDK) deal or potential joint acquisition of SNDK with WDC before a straight WDC deal

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