WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 178.23

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3:59 PM EST

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To: Robert Douglas who wrote (26289)	7/3/2004 10:11:12 AM
From: Art Bechhoefer	Read Replies (1) of 60323

Robert, re: cost differences for Lexar and SanDisk. Lexar buys wafers produced by others and has others do the manufacturing of the flash cards. They obviously must pay more for the product than a manufacturer who makes the cards, otherwise the manufacturer would not be interested in Lexar's business. Furthermore, Lexar must pay royalties to SanDisk on at least some of its products, especially those that use the "SD" format. So that is why Lexar margins are unlikely to be as good as SanDisk margins at a time when growing demand pretty much soaks up the supply. If there were a period when everybody was stuck with excess inventory, as happened in 2000, due to double ordering, then Lexar would fare better. Art

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