WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 212.19

+5.9%

Jan 12 3:59 PM EST

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To: broozer who wrote (27296)	1/26/2005 2:04:34 PM
From: Robert Douglas	Read Replies (1) of 60323

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! If it were a fixed percentage you would still have more units which would keep the total rising. No, I think there's something more than ASP declines at work here. I thought Sandisk's "business model" was to drive down prices because they would make up in royalties what they lost in margin from their products. Yet the portion of their business that is from license and royalty is dropping. I've got to conclude that their royalty stream is not going to be the asset I thought it was earlier this year.

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