WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 214.00

+0.9%

Jan 13 3:59 PM EST

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To: Robert Douglas who wrote (27295)	1/26/2005 12:13:54 PM
From: broozer	Read Replies (1) of 60323

The number I'll be watching most closely will be the royalty and license number. R & L as a percent of total revenue (removing the quarter lag) has been decreasing lately. Bear Stearns' estimate is for a decline to $35 million which is below the $35.9 million a year ago despite a 40% increase in product sales. If this number is accurate we need to arrive at an explanation as to why. Are the patents expiring? Are licensees designing around them. What will be the trend over the next few years? SNDK itself guided to $30-$35M this quarter.....license and royalty revenue is dropping as ASP declines in the marketplace. L&R is likely a fixed percentage. But it is a fixed percentage of a rapidly declining figure - ASP. ASP's dropped about 30% in Q3 across the industry and will have dropped at least 40% in Q4 across the industry. Yikes! The thing I am interested in seeing is how well the product GM held up, which is a function of the ASP and the captive vs. non-captive supply (forecast at 65/35 this Q by SNDK). My hunch is this quarter may be ok given LEXR's revenue number. Consider how much greater distribution SNDK has than LEXR (Staples, Best Buy, Costco, Circuit City, etc.) and then think about revenue. It will be interesting. Best, Parkite

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