WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 163.00

-0.4%

3:59 PM EST

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To: StockHawk who wrote (13086)	7/19/2000 6:30:24 PM
From: orkrious	Read Replies (1) of 60323

What a great CC. A few notes: ASP's actually went up during the Q2, caused by a shift to higher capacity cards. The price/MB decreased 8%. I think Eli tries to sandbag the analysts and lowball numbers to give us these nice upside surprises. Despite the fact that royalties this Q were $21 mil, his guidance for the next several quarters is $17 mil. He explained this by saying that there are some licensees for whom their fixed cost component of their license is going to be paid up, so Sandisk is going to lose those. He said that since the Lexar decision, other companies are now willing to negotiate licensing agreements, and hopefully some of these would come online to help offset the loss of the other fixed payments. They are backlogged into Q1 '01. They are on allocation with all customers and all products. Their yields for their new process (.24 micron D2?) are about 10% below their yields on their old process. They expect improvement. Dominion going according to plan. SD developing well. Constrained by wafers in existing two fabs, but upside will come from new fab. Margin guidance for Q3 is 1/2 to 1 percent improvement. The same again for Q4. Most important!!! The last questioner asked the question that I was trying to get in to ask. This is the same question I couldn't believe none of the other so called "analysts" asked: What effect would all of the capacity coming on line have on them? Eli's response was something like: I can't believe how many people don't understand our business. It is crazy. I just listened to the SSTI call saying that 80% of their sales came from 2Mbit flash. We sell 256Mbit flash. Toshiba, Sandsik, Hitatchi, and Samsung are the only companies that make this, and all of the other flash capacity being added isn't going to alleviate the situation. The above aren't Eli's exact words, but it conveys his meaning. Remember it! Great call! Jay

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