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This morning, global 1 flicker recollection giver Samsung announced it is completely withdrawing its tender to acquire NAND flicker tag director SanDisk, and even provided a departure affront on its manner out the door.

The judgment to withdraw the pitch to acquire SanDisk Business at 26 per share was made in considerations of the growing doubts in SanDisk s business, its stand alone value, and the current difficult economic environment, reads Samsung s public testimony of its judgment reached late yesterday.

Not that a selloff wasn t already under manner on Partition Street, but the souk responded to Samsung s little observations by punishing SanDisk severely. In the first 30 report of trading, its reserve charge on the NASDAQ had plummeted by 27 , to 10.60 per share -- about 40 of what Samsung had offered for the company. Samsung shares were trading flat in the same period.

Later the history evening, Samsung publicly revealed the stuffing of a dispatch sent by its CEO, Yoon Woo Lee, to SanDisk s timber of directors. Here is the dispatch in its entirety:

October 22, 2008

Board of Directors
SanDisk Corporation
601 McCarthy Boulevard
Milpitas, CA 95035

Attention: Dr. Eli Harari, Chairman and Ruler Executive Officer
Mr. Irwin Federman, Vice Chairman and Lead Independent Director

Dear Eli and Irwin:

After nearly six months of labors to pursue a matter with rejection meaningful progress, we are withdrawing our pitch to acquire SanDisk. I am disappointed that we have been unable to reach an conformity on our proposal. I continue to believe that a amalgamation of our two companies would have created a superior global brand, an unparalleled tools stage and the extent and funds to drive union in the marketplace. Had we been able to execute on our proposal, your shareholders would have received full, fair and certain charge for their shares and your people and other stakeholders would have benefited from a broader stage and a wider array of opportunities.

Nevertheless, we have obligations to our own shareholders which require that we take a disciplined approach, particularly with esteem to significant initiatives such as this. That disciplined approach requires that we squarely mug the growing doubts in your business, which may continue to deteriorate in this difficult economic location and further force your standalone value. Your recently announced third neighborhood consequences serve only to illustrate this risk. Your blow announcements of a neighborhood billion dough operating loss, a hurried renegotiation of your connection with Toshiba and major occupation dead across your institute all peak to a considerable increase in your menace contour and a stuff wear in value, both on a stand-alone starting point as well as to Samsung. As a effect of these developments, we are rejection longer interested in acquiring SanDisk at 26 share.

While I regret that we were unable to labor together to achieve a dealing amalgamation that would have created new opportunities for all of us, we craving you the best in summit the challenges ahead.

Sincerely,

Yoon Woo Lee
Vice Chairman CEO
Samsung Electronics Co., Ltd.

The quarter-billion-dollar failure to which Yoon referred was reported by SanDisk only hours earlier, and confirmed by its weekly rate call the history daylight The corporation reported a failure of 155.2 million for the previous quarter, compared with black ink to the melody of 84.6 million for the third agenda neighborhood of 2007. Sales of its principal artifact declined more than 20 on an annual starting point -- this in a souk where demand is supposedly doubling.

View the full SNDK graphic representation at Wikinvest But it s not that consumers are suddenly rejecting SanDisk. As SanDisk Business leader Eli Harari sees it, his corporation -- along with the rest of the invention -- should not have made huge hoard in new manufacture services at a instant when supply was already starting to grow faster than demand. Harari s commentary the history merit to Seeking Alpha for the record do not bode well for his corporation s enterprise with Toshiba in a joint invention facility, 30 of which was re-acquired by Toshiba on Monday.

Our invention continues to familiarity excessive inventories, operating dead and weakening equilibrium sheets, as a effect of NAND fab arrangement decisions that were made well before the current global economic crisis, Harari said. Recently, major NAND manufacturers announced shut-downs of 200 millimeter NAND wafer fabs and push outs of new 300-millimeter capacity. This is a positive pace for bringing supply into equilibrium with demand so that pricing can stabilize and so that prosperity can return. badge a notice sent to BetaNews this morning, Aim Psychotherapy psychoanalyst Jim Handy offered his view that Samsung s public taking out of its tender for SanDisk...could be the next positive pace in its tender to acquire SanDisk. How else does one drive the cost lower for more, see Microsoft Yahoo ?

Samsung s stockholders self-control be rewarded stipulation the corporation can acquire SanDisk at the lowest possible price. Today s broadcast should help Samsung push SanDisk s share cost lower, assembly it possible to acquire the corporation at a better arrangement than the 26 per share that Samsung previously offered, Handy wrote.

But, as we have told numerous newspapers over the last few days, both companies boards are performing in the best benefit of their shareholders, he continued. Samsung has a fiduciary responsibility to avoid renegotiating a very expensive sovereigns conformity that expires in August. Condition Samsung acquires SanDisk, not only self-control they avoid paying some 200 million a day in royalties, but they self-control also be able to collect 200-300 million in royalties from SanDisk s other licensees. On the other hand, SanDisk has the fiduciary responsibility of getting a cost that accurately reflects not current souk conditions, but the charge of the corporation over the long term. The corporation has spent significant labors and investment to garner a rights set that gives it control of nearly every characteristic of its markets over the long term, and these patents are very likely to be far more valuable in the expectations than they have been in the past.
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