Jim, in discussing royalties and other issues with Frank Calderoni on the phone yesterday, I was somewhat disappointed with his lack of detail. The main point I was trying to make was that unless we know more about the licensing and royalty details (how much, and from which licensees), we cannot determine if SNDK profit margins reflect those of a commodity producer or a company with royalty bearing patents.
Without knowing the extent to which SNDK products are proprietary and unable to be sold by others without payment of a royalty, we can't determine an accurate figure for earnings growth. I tried to explain this dilemma to Calderoni and suggested that if he felt inundated by all the phone calls, faxes, and emails he was receiving, he ought to consider issuing a press release with the information people are asking for. I noted that that information should be filed with the SEC anyhow, as it is relevant to future earnings.
Calderoni was not terribly enthusiastic about my suggestions, to put it mildly, but maybe he'll get a wakeup call if the SEC makes some inquiries . . . On the plus side, we're still talking about one of the few younger, fast growing companies that has very little debt, skilled management, and at least some proprietary products. Furthermore, the market for flash memory is growing faster at the high capacity end, where SNDK really dominates.
This is one reason why I think the stock remains quite undervalued. Even in this depressed market, the growth in demand for flash memory would justify at least three times the present price of the stock.
Art |
