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Technology Stocks : WDC/Sandisk Corporation

WDC 221.57

-0.2%

Jan 16 3:59 PM EST

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To: Dave who wrote (25847)	5/18/2004 7:59:35 AM
From: Art Bechhoefer	Read Replies (2) of 60323

Dave, according to news reports (Rochester NY newspapers), Lexar cards are sold in about 40,000 retail outlets worldwide, which is less than half the outlets selling SanDisk cards. Lexar also was selected by Nikon as its main supplier--a policy going back about two years or so. The fact that Lexar has weaker retail distribution than SanDisk justifies its alliance with Kodak, which has a much larger distribution system. However, with Kodak using its distribution muscle and taking a cut of the action, it's going to affect profit margins for Lexar. As an aside, I am looking at the Kodak-Lexar deal more as a benefit for Samsung, which produces cards for Lexar. This will make Samsung and SanDisk/Toshiba the two principal manufacturers of flash cards. Undoubtedly there will be some price competition here. The question is whether a manufacturing and distribution chain involving Samsung, Lexar, and Kodak will be able to compete with the more vertically integrated approach taken by SanDisk. Art

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