"Lexar shall enter into a 4% royalty-bearing license agreement for certain
Lexar products that may use the `987 Patent beyond March 31, 2001.'
Jay, I assumed that meant that any unsold CompactFlash products with
SNDK technology could not be sold without additional royalty payments
after the stated date. I think that was mentioned in a Lexar c.c.
Lexar stated that any unsold CF with SanDisk technology in the controller
would be sold in Asia, specifically Japan, where SanDisk's patents are not
recognized. In the meantime they have another two months to liquidate this
inventory in order to scrape up some more cash to buy flash wafer. In December
Lexar Media had a conference call indicating that they would have an
inventory management problem in Q1 of 2001. They also stated during
the most recent conference call that they were hoping to buy flash chips
"on consignment" in order to take advantage of falling raw material costs.
This quarter Lexar is again offering rebates to consumers and incentives
to retailers. I was in to CompUSA yesterday and the "4x" 64 MB CF cards,
which represent their oldest inventory (manufactured in 1999!), were on
sale for $119.99 plus a $20 mail-in rebate. There was also a $10 rebate
on 32 MB "4X" CF cards which were also sale priced. These items both
ship with a Jumpshot cable, so I assume that Lexar is taking a bath
on these sales. The "freshest" inventory are the premium "8x" cards
which carry are still expensive. A 64MB "8X" CompactFlash sells for $159.99
at CompUSA. There was an enormous Lexar Media display at this store, but
there were also "Memorex" CF as well. All the SanDisk cards from the
holiday season were sold out (except a few MMC).
At the largest BestBuy near my home SanDisk 64MB CompactFlash
was priced at $139.99 without a rebate. When I went into the store
I was quite astonished to find no available SanDisk CF or SM. When I
asked the salesperson if they were still carrying SanDisk he said...
"We can't seem to keep it on the shelves. I really don't know why.
I mean, okay, it's because the digital cameras only come with 8MB cards.
That's why. But as soon as we stock up the cards seem to sell right away.
We are one of the high traffic BestBuy stores, so you may want to go to
one of the smaller stores. By the way, PNY has CompactFlash, too.
What's wrong with PNY. Have you heard something about them?
I had to wonder if perhaps they are waiting for the PNY items to clear
before restocking the SanDisk cards. I also wonder why SanDisk doesn't
have the usual "We are currently out of stock of this popular item"
signs hanging on the back of the display rack pins. I think that is
a terrible missed opportunity to forward the brand identity cause.
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