Here are a couple of my impressions from the conference call. Harari noted that the solution to the Napster (copyright infringement) problem is the SD card. Because of the uncertainties that affected manufacturers of MP3 players, caused by the Napster copyright litigation, sales of MMC were less, but as Eli stated, "Napster confirms the future for SD."
Harari noted that when people buy a high digital camera (2.1 mp or higher), they generally buy a second CF card with higher capacity than that supplied with the camera, which is good for retail sales. He also noted that some of the lower priced cameras come without any cards, so that gives SNDK extra profits from retail sales, compared to OEM.
From the report itself, investors should note that there is over $6/share in cash or cash equivalents, which means that 10 percent of the share price is cash. Compare that with companies like Amazon.com, which is at an extremely perilous cash shortage situation. I wonder if the investment community will recognize the advantages of having cash on hand to finance operations and expansion.
Meanwhile, shareholder equity increased by more than 50 percent, and at the same time, debt as a percent of equity remained well below acceptable levels for low risk companies. The rate of earnings growth obviously justifies a price-earnings ratio much greater than the current level. In fact, a PE of 60 to 70, based on forward looking operating earnings, would give you a price per share of $90 to $100, and that's a conservative estimate, conditioned by the overall investor pessimism concerning key technology stocks at this time.
In other words, without even trying to price the shares to perfection, you could get a 60-70 percent jump from present levels.
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