WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 179.56

+0.7%

Dec 24 9:30 AM EST

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To: Steve 667 who wrote (18813)	1/29/2001 7:41:51 PM
From: Zeev Hed	Read Replies (1) of 60323

I don't think it is really that bad. The differential in inventories between last quarter and this quarter is $27 MM. As I have said before, whatever is on the shelves at retailer is considered SNDK's inventory since they do not recognize sales until it got off the shelf and the hand of a consumer. Since the last quarter includes at least the last two weeks before January first, I would not be surprised to see that a lot of this inventory actually got sold but not reported yet as revenues by SNDK.I would say that 2/3 of the increase (about $18 MM) is such shelves inventories. That leaves us with a true increase in inventories of $9 MM which indeed can be due to OEM slowing down their own ordering and SNDK not reacting in time. I doubt this is catastrophic. I expect to see a weaker quarter, as I mentioned before, but something of the order of $10 MM or so less shipments than this quarter. The big hit to the bottom line, however, will still be, IMHO, the decrease of some $5 MM in royalties. Zeev

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