WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 163.00

-0.4%

Nov 7 9:30 AM EST

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To: StockHawk who wrote (13086)	7/19/2000 6:07:06 PM
From: Jim Greif	Read Replies (3) of 60323

Guys and Gals, I listened to the conference call. It was very up-beat--for good reason. A 50% suprise is nice indeed. These are my notes. PLEASE UNDERSTAND THAT I MAY NOT HAVE BEEN COMPLETELY ACCURATE. They are only notes. Jim Frank Calderoni – sold over 3 million units in the quarter Average price per megabyte decreased 8 percent. Sales to Japan up to 26 percent of revenues. 66% of sales came from consumer market. Sales thru retail grew 38% -- 28% of revenues. Expect patent royalties to be $17 million or higher for next several quarters Expect expenses to increase as development of higher memory chips continues. Also expect sales and marketing to go up to boost retail market. Net income up 58% over first quarter, less the one-time gain from UMC. Eli Harari – significant increase in sales flash chip set for internet appliances. On allocation with all customers for all products. Major transition from .28 micron to .24 micron technologies. Expect to start production of D2 chips from all three UMC fabs by end of quarter. Yields vary from fab to fab – running 10-15% below previous technology. Expect parity within the quarter. In 4th quarter – flash capacity should be much improved. Global supply for some components is still stretched to limit. Agreements with Toshiba and Matsushita have now been completed. Dominion is proceeding according to schedule. Good progress with SD cards. Palm and Phillips are now board members of SD association. Sony is the only cam corder producer not using SNDK’s card. This is a new market area. Tower will be doing .18 micron. Will not be using as flash memory supplier. Increase in royalties – did not come from any new licensees. Since ruling against Lexar, pace of licensing negotiations with new licensees is picking up. Little progress on Lexar or Mitsubishi. SNDK’s prospects coming holiday season are very good. Lexar – their new statement – the fact that they are designing around patents indicates that they know the severity of the situation. We think that they may be infringing more than one patent. Industrial telecom – growing strongly. Supply constrained. Constrained to certain number of wafers. In existing two fabs, can handle either .28 or .24 microns. Problem is if increase .24, must decrease the other. Collecting significant royalty income from part of market we cannot supply. Two licensees have fixed payments as part of their royalties – those will stop, although volume-related payments will continue. Seagate – estimate slightly in excess of one million shares or less. Q4 allocation – leaning toward supporting top 30 clients rather than trying to support all potential customers. Capacitor constraints – having to redesign boards so that can use a more available capacitor. SST – 80% of their capacity is 2 megabytes or less. Not at all in the same market. Only toshiba, samsung and one other (hitachi?) are the only ones that have capability to produce 256 mg. Output from third fab will be available in September, but no exact date. Already booking into 1st quarter of 2001.

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