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Technology Stocks : WDC/Sandisk Corporation

WDC 155.61

-2.7%

3:59 PM EST

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To: John Trader who wrote (19959)	4/4/2001 7:29:00 PM
From: Ausdauer	Read Replies (1) of 60323

John, We are turning into a consumer products company. Why? Because the OEM business seems to be a dwindling source of revenues due to inventory issues and because telecom spending has slowed. OEM sales for bundled flash cards also seems to be a low margin, high volume business that was nice to have, but clearly not the magic that would drive bigtime sales. It is the aftermarket where we have to make headway. It would seem likely that some of the digital camera makers will have to let much of their older products go at deeply discounted prices in order to make room for newer products. The same can be said for MP3 players and PDA's. I still don't believe that bundled sales will be a big winner for us going forward, but inexpensive (discounted) hardware may spur demand for cards. The question remains what the consumer is willing to spend and how much the market's turmoil influences the types of purchases we need to spark card sales. It would seem logical that big ticket items such as vacations, new cars or home renovations will fall off sharply, but would an avid Internet user put off a digital camera purchase if it were under $300 or so? I just am not sure. Also, will teenagers go without newer, high capacity MP3 players if they sell (with flash) under $200 a pop? How about upgrading to the newest Palm device with an SDMC slot for $400 and change? I am not sure how these purchases will be affected, but I guess I am worried about how consumer confidence will swing going forward. I have been saving cash for the last 5 months or so as I have watched my SanDisk investment dwindle. Right now consumer spending will be the key as SanDisk has made a substantial bet on expanding production capacity with the new fab at UMC, the Toshiba JV and the purchase agreements with Hitachi. All of this product has to go somewhere and consumers are going to be the big purchasers, not OEM's. What we need now is for Congress to enact another gift giving holiday. Maybe high school and college graduations will give us a small bump in sales with Summer travel and outdoor activities giving us a second lift??? Aus@stashingcashlikeasquirrel.com

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