From Merrill:
Estimated product revenue breakout was as follows:
CompactFlash, 50% of product revenues, up 11% QoQ;
FlashDisk, 13%, down 6% QoQ; MultiMediaCards, 20%,
down 18% QoQ; SmartMedia, 9%, up 54%; and flash
chipset, 5%, down 25% QoQ. CompactFlash revenues
increased due to stronger-than-expected demand from the
retail end market. The sharp decrease in MMC sales was
due to lower demand from the MP3 player end market.
We believe MP3 player unit sales for F00 will be far below
our original 3 million unit estimate, and could be as low as
1.5 million units due to the price of MP3 players being too
high. FlashDisk revenues were down due to the inventory
correction in the PC end market.
Next two quarters will be challenging
We believe CompactFlash pricing will begin to come
under increased pressure with supply becoming readily
available for the first time in several months due to flash
manufacturers continuing to ramp capacity and an
upcoming slowdown in digital camera sales. When this is
coupled with the inventory correction and a slackening
economy, we believe the next 3-6 months will prove
especially difficult for SanDisk.
However we are still positive long-term
We believe investors with a long term time horizon (12-18
months) should find attractive entry points for SNDK in
the coming months. We continue to believe data-storage
flash is one of the most attractive markets in the
semiconductor universe, with an estimated five year
CAGR of 43%, from $1.3 billion in 2000 to $5.3 billion in
2004. We believe cellular phones and PDAs will be major
drivers of increased data-storage flash over the next 3-5
years, with digital cameras continuing to grow at healthy
rates. In addition, we believe the company’s new
fabrication facility located in Virginia will bring down
SanDisk’s cost structure soon after the fab comes on line
during 3Q01. Our long-term rating remains at Buy. |
