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Technology Stocks : WDC/Sandisk Corporation
WDC 168.90+4.9%Dec 5 3:59 PM EST
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To: Art Bechhoefer who wrote (6857)9/1/1999 1:19:00 PM
From: Paul Senior  Read Replies (2) of 60323
 
Art, regarding compressed supply and subsequent increased profit margins: I am assuming you and others are correct about this.

For me, when I read some of the news announcements about joint ventures, I don't see (perhaps it is just me) that SNDK profits are based necessarily on the number of cards built. That is, I can't tell if these 'agreements' are or will be, fixed-priced (or even one-time) royalty payments, payments fixed per each number of units that suppliers build (in which case, if supply is limited, profits to SNDK will be limited) or if the agreements say payment$/unit to SNDK diminish as numbers of flash cards built are increased. If any of this were true and SNDK did not figure what MP3 demand or other demand would do to limit their profits, it could be a reason SNDK might want to buy its own fab. (Just my opinion- unsupported by any facts --- or any knowledge, -g-, on my part.)

Paul Senior (long SNDK)
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