November 7, 2000 SUMMARY
* M-Systems Flash Disk Pioneers (FLSH) announced
SEMICONDUCTORS introduction of a new product line called DiskOnKey. It
Victor Halpert is designed to replace floppy disks that are used to take
information from one PC or laptop notebook to another.
Floppy disks are limited in capacity and offer an
Colby Wheeler unreliable solution. We believe the DiskOnKey is much more
dynamic and functional. With up to 32 MB of storage, it
also offers much more storage capacity for data-intensive
files. 32MB is equivalent to 22 3.5" diskettes.
* FLSH indicated that the device will be on display at
COMDEX/Fall 2000 in Las Vegas next week. Management
expects one of the largest notebook and personal computer
manufacturers in the US to announce a partnership
regarding the DiskOnKey with M-Systems in conjunction with
the trade show.
* We are maintaining our estimates for 2001. We expect
revenues of $135 million with EPS of $0.59. We reiterate
our 1H rating and $50 price target.
FUNDAMENTALS
P/E (12/00E) 60.7x
P/E (12/01E) 46.3x
TEV/EBITDA (12/00E) 85.1x
TEV/EBITDA (12/01E) 50.3x
Book Value/Share (12/00E) $5.88
Price/Book Value 4.6x
Dividend/Yield (12/00E) NA/NA
Revenue (12/00E) $92.2 mil.
Proj. Long-Term EPS Growth 50%
ROE (12/00E) 7.2%
Long-Term Debt to Capital(a) NA
(a) Data as of most recent quarter
SHARE DATA RECOMMENDATION
Price (11/6/00) $27.31 Current Rating 1H
52-Week Range $44.25-$7.19 Prior Rating 1H
Shares Outstanding(a) 29.1 mil. Current Target Price $50.00
Convertible No Previous Target Price $50.00
EARNINGS PER SHARE
FY ends 1Q 2Q 3Q 4Q Full Year
12/99A Actual ($0.04)A ($0.03)A ($0.02)A $0.00A ($0.09)A
12/00E Current $0.05A $0.12A $0.14A $0.14E $0.45E
Previous $0.05A $0.12A $0.14A $0.14E $0.45E
12/01E Current $0.14E $0.14E $0.15E $0.16E $0.59E
Previous $0.14E $0.14E $0.15E $0.16E $0.59E
12/02E Current NA NA NA NA NA
Previous NA NA NA NA NA
First Call Consensus EPS: 12/00E $0.44; 12/01E $0.56; 12/02E NA
NEW USB STORAGE PRODUCT "DISKONKEY" ANNOUNCED
M-Systems Flash Disk Pioneers (FLSH) announced today, November 6, 2000, the
introduction of a new product line called DiskOnKey. DiskOnKey is a portable
secured data storage device based on flash memory. It is a reliable,
portable solution that will improve the capability to transfer data files
from the PC environment to a computer notebook or other similar device using
a standard USB port. It will initially be offered in capacities of 8, 16, or
32 MB.
ABOUT DISKONKEY
DiskOnKey is a pen-sized device that is based on M-Systems TrueFFS
technology, as well as a newly-developed and patented DiskOnKey technology.
DiskOnKey is compatible with all major operating systems, including Mac O/S,
Windows Millenium and Windows 2000. The unit can be plugged directly into a
USB (Universal Serial Bus) port on the back of your PC or other computer
device. Without any additional hardware or software installments, the user
can store up to 32 MB of data. The device can then be unplugged, put in your
pocket and later attached to a completely different PC or laptop notebook for
retrieval of the data.
The bottom line: the DiskOnKey is designed to replace floppy disks that are
used to take information from one PC or laptop notebook to another. Floppy
disks are limited in capacity and offer an unreliable solution. The
DiskOnKey is much more dynamic and functional. It has no moving parts and is
a completely, self-contained unit that offers more reliability than a
standard floppy disk. With up to 32 MB of storage, it also offers much more
storage capacity for data-intensive files. 32MB is equivalent to 22 3.5"
diskettes.
DISKONKEY MEETS THE DEMANDS OF PC AND NOTEBOOK MANUFACTURERS
Several top-tier computer manufacturers including, IBM (IBM#-1H; $100.13),
Dell (DELL-2H; $32.56), Compaq (CPQ#-3H; $31.09) and Apple (AAPL-3H; $22.25)
have expressed interest in the DiskOnKey device. The DiskOnKey will provide
a simple storage solution that is compatible with a variety of appliances
that have a USB port. Particularly among notebook users, it will provide an
alternative to floppy disks, which can be unreliable and lack the capacity
needed for many data files.
OEM PARTNER EXPECTED TO ANNOUNCE NEXT WEEK AT COMDEX
FLSH indicated that the device will be on display at COMDEX/Fall 2000 in Las
Vegas next week. One of the largest notebook and personal computer
manufacturers in the US is expected to announce a partnership regarding the
DiskOnKey with M-Systems in conjunction with the trade show, management
disclosed.
REITERATE 1H RATING AND $50 PRICE TARGET
FLSH management continues to deliver on its promises of innovative,
functional storage devices that meet customer expectations in this Internet-
enabled world. We will be watching closely to see how large of an order is
expected from the partner OEM and how effective this new product will be
marketed.
We expect that M-Systems will have less than $10 million in sales for the new
DiskOnKey product in 2001. We are maintaining our estimates for 2001. We
expect revenues of $135 million with EPS of $0.59. We reiterate our 1H
rating and $50 price target. |
