WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 179.68

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3:59 PM EST

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To: pompsander who wrote (27976)	4/22/2005 2:51:58 PM
From: clix	Read Replies (1) of 60323

From the Merrill report: In addition, the startup costs for Fab 3 will begin to roll into cost of goods sold as early as Q3. I have been wondering about this. I understand that part of the Flashvision costs are balance-sheet items and part are off-BS. But does anyone here have an understanding of what can be expected exactly? Last November, Sandisk said that its share of the Fab 3 cost would be $1.25B through 2006. Later, it showed some numbers that have 2005 outlays at $600m and 2006 outlays as $700m (of which $240m and $350m, respectively, are off-BS). How will these outlays manifest themselves? Will the off-BS portions appear as COGS? At a minumum, it seems that significant cash draw-downs will occur. And, do these fab investments add long-term value to the company? Or are they really a way to disguise a part of the cost of goods?

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