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To: H James Morris who wrote (92552)	1/29/2000 6:26:00 PM
From: GST	Read Replies (1) \| Respond to of 164684

HJ -- truth is stranger than fiction. And it is legal! As for your kilt -- I remember a fragment from an old joke -- something about a guy who goes to a party in a kilt and gets really drunk and ends up not making it all the way home -- he falls asleep by the side of the road and his kilt is.. aahhh .. well sort of messed up and exposing his manhood. Some neighborhood kids see him and, as a little prank, they tie a blue ribbon to his thing. He wakes up in the morning and stumbles home and sees this ribbon. When his wife asks him what happened to him the night before, he says "I don't remember, but whatever it was, I won first prize". Watch your step HJ, in your neighbourhood they might not use a blue ribbon :)

To: H James Morris who wrote (92552)	1/29/2000 9:49:00 PM
From: Tom D	Read Replies (1) \| Respond to of 164684

I am not sure about that, HJ. I think it is customary when a VC firm funds a company, to put the title to those shares in the name of the VC partner who represented the VC firm. Then if anybody who invested in that particular VC fund wanted to sell their shares, it could show up as a sale under the name of that particular VC partner, even though the VC partner sold none of his or her own personal shares. Its the SECs way of looking our for us small investors by making this kind of reporting as clear and simple as possible. Tom

To: H James Morris who wrote (92552)	1/30/2000 1:10:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

SanDisk Corp Inc ? 27 January 2000 3 Table 1: SanDisk Income Statement (figures in $millions, except per share data) FY end: Dec. Mar 99 Jun 99 Sep 99 Dec 99 F99 Mar 00E Jun 00E Sep 00E Dec 00E F00E Mar 01E Jun 01E Sep 01E Dec 01E F01E Total Revenue 44.1 52.5 67.5 82.8 247.0 99.5 108.5 118.0 139.0 465.0 152.0 167.0 182.0 219.0 720.0 Product 35.9 42.3 57.4 69.9 205.6 87.0 96.0 106.0 127.0 416.0 140.0 155.0 170.0 207.0 672.0 Lic. & Royalties 8.2 10.2 10.1 12.9 41.4 12.5 12.5 12.0 12.0 49.0 12.0 12.0 12.0 12.0 48.0 % Change Y/Y 29.4% 67.6% 110.5% 116.6% 81.9% 125.4% 106.5% 74.7% 67.9% 88.3% 52.8% 53.9% 54.2% 57.6% 54.8% % Change Q/Q 15.5% 19.1% 28.5% 22.6% 20.2% 9.0% 8.8% 17.8% 9.4% 9.9% 9.0% 20.3% Cost of Sales 26.5 30.9 43.9 50.9 152.1 61.1 66.2 72.1 83.8 283.2 91.0 100.3 109.3 132.1 432.7 % Change Y/Y 49.2% 50.1% 133.0% 120.0% 89.5% 130.4% 114.7% 64.2% 64.7% 86.1% 49.0% 51.4% 51.7% 57.6% 52.8% % Change Q/Q 14.6% 16.4% 42.3% 15.9% 20.0% 8.5% 8.8% 16.3% 8.6% 10.2% 9.0% 20.8% Prod. Gross Margins 26.2% 27.1% 23.6% 27.2% 29.8% 31.0% 32.0% 34.0% 35.0% 35.3% 35.7% 36.2% Gross Margins 39.9% 41.3% 35.0% 38.5% 38.4% 38.6% 38.9% 38.9% 39.7% 39.1% 40.1% 39.9% 39.9% 39.7% 39.9% SG&A 7.6 8.7 9.7 11.9 37.9 14.3 15.4 16.5 19.2 65.4 20.7 22.7 24.8 29.8 97.9 % of Total Revenues 17.1% 16.5% 14.4% 14.4% 15.3% 14.4% 14.2% 14.0% 13.8% 14.1% 13.6% 13.6% 13.6% 13.6% 13.6% R&D 5.2 6.0 6.9 8.7 26.9 10.6 12.5 13.8 16.7 53.6 18.2 20.0 21.8 26.3 86.4 % of Total Revenues 11.8% 11.4% 10.3% 10.5% 10.9% 10.7% 11.5% 11.7% 12.0% 11.5% 12.0% 12.0% 12.0% 12.0% 12.0% Operating Income 4.8 7.0 7.0 11.2 30.1 13.5 14.4 15.6 19.3 62.7 22.1 24.0 26.1 30.9 103.0 % of Total Revenues 11.0% 13.4% 10.3% 13.6% 12.2% 13.5% 13.2% 13.2% 13.9% 13.5% 14.5% 14.3% 14.3% 14.1% 14.3% Other Income(Exp) 1.6 1.5 2.8 3.7 9.5 4.5 4.7 4.8 2.0 16.0 1.0 1.0 1.0 1.0 4.0 Pretax Income 6.5 8.5 9.7 15.0 39.6 18.0 19.1 20.4 21.3 78.7 23.1 25.0 27.1 31.9 107.0 % of Total Revenues 14.6% 16.2% 14.4% 18.1% 16.0% 18.0% 17.6% 17.3% 15.3% 16.9% 15.2% 14.9% 14.9% 14.6% 14.9% Income Taxes 2.1 2.8 3.2 4.9 13.1 6.1 6.5 6.9 7.2 26.8 7.8 8.5 9.2 10.8 36.4 Tax Rate 32.9% 33.0% 33.0% 33.0% 33.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% Net Income 4.3 5.7 6.5 10.0 26.6 11.8 12.6 13.5 14.1 52.0 15.2 16.5 17.9 21.0 70.6 % of Total Revenues 9.8% 10.8% 9.6% 12.1% 10.8% 11.9% 11.6% 11.4% 10.1% 11.2% 10.0% 9.9% 9.8% 9.6% 9.8% Avg. No. of Common Shares 29.3 29.5 30.5 33.5 30.7 36.2 36.5 36.9 37.4 36.8 38.4 38.8 39.2 39.6 39.0 Fully Diluted EPS $0.15 $0.19 $0.21 $0.30 $0.85 $0.32 $0.34 $0.36 $0.38 $1.40 $0.39 $0.42 $0.46 $0.53 $1.80 % Change Y/Y -10.6% 402.2% 129.5% 129.7% 98.7% 113.3% 78.9% 71.4% 26.7% 64.7% 21.9% 23.5% 27.8% 39.5% 28.6% % Change Q/Q 14.9% 26.7% 10.5% 42.9% 6.7% 6.3% 5.9% 5.6% 2.6% 7.7% 9.5% 15.2% Source: Merrill Lynch and The Company [SNDK] MLPF&S was a manager of the most recent public offering of securities of this company within the last three years. [SNDK] The securities of the company are not listed but trade over-the-counter in the United States. In the US, retail sales and/or distribution of this report may be made only in states where these securities are exempt from registration or have been qualified for sale. MLPF&S or its affiliates usually make a market in the securities of this company. Opinion Key [X-a-b-c]: Investment Risk Rating(X): A - Low, B - Average, C - Above Average, D - High. Appreciation Potential Rating (a: Int. Term - 0-12 mo.; b: Long Term - >1 yr.): 1 - Buy, 2 - Accumulate, 3 - Neutral, 4 -Reduce, 5 - Sell, 6 - No Rating. Income Rating(c): 7 - Same/Higher, 8 - Same/Lower, 9 - No Cash Dividend. Copyright 2000 Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S). This report has been issued and approved for publication in the United Kingdom by Merrill Lynch, Pierce, Fenner & Smith Limited, which is regulated by SFA, and has been considered and issued in Australia by Merrill Lynch Equities (Australia) Limited (ACN 006 276 795), a licensed securities dealer under the Australian Corporations Law. The information herein was obtained from various sources; we do not guarantee its accuracy or completeness. Additional information available. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities ("related investments"). MLPF&S and its affiliates may trade for their own accounts as odd-lot dealer, market maker, block positioner, specialist and/or arbitrageur in any securities of this issuer(s) or in related investments, and may be on the opposite side of public orders. MLPF&S, its affiliates, directors, officers, employees and employee benefit programs may have a long or short position in any securities of this issuer(s) or in related investments. MLPF&S or its affiliates may from time to time perform investment banking or other services for, or solicit investment banking or other business from, any entity mentioned in this report. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security?s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk.

To: H James Morris who wrote (92552)	1/30/2000 1:17:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

DIS Disney (Walt) Company ? 26 January 2000 (Continued) 2 n Approaching an Inflection Point ? Raising Rating, Price Objective and Estimates We are raising our near-term rating on Disney from Neutral to Accumulate with a new 12-month price objective of $37 per share, upside of 12% from current levels. There are a number of factors prompting us to upgrade the stock at current levels. There are more signs of at least a modest recovery in Disney?s underlying performance. We believe investor perception towards Disney will continue to become more positive, in part due to these first signs of stabilizing to improving operating results. In addition, in light of the AOL Time Warner mega-merger and the implication for companies with unique and distinctive content, such as Disney, multiples for the handful of vertically integrated media and entertainment companies is likely to rise.. We have maintained our view that despite the near-term trough in operating results, Disney is, and will remain, a preeminent media and entertainment franchise, flush with world class assets, unique content creation capabilities and depth in management (strengthened today with the appointment of Bob Iger to President and COO, thereby alleviating any succession issues). The core reason for our Neutral stance centered on the lack of earnings visibility. Thanks, in large part, to the sensational success of Who Wants to Be a Millionaire in conjunction with the increasingly robust advertising environment, across virtually all media platforms, Disney?s Media Networks segment (which encompasses both cable network and broadcast properties) is quickly improving Disney?s visibility of an earnings? recovery. While we note that Media Networks? Q1 operating growth of 73% is not sustainable throughout the remainder of FY00, we are increasing our full year operating income and EPS estimates on the heels of the exceptionally strong Q1 results. We are introducing a 12 month price objective of $37 per share, upside of 12% from current levels, based on a blended target multiple of 15x estimated CY01 EBITDA. Disney shares are currently trading at an EV/EBITDA of 15.4x and 13.6x CY00E and CY01E EBITDA, respectively. We are raising our FY00 EPS estimate to $0.73 from $0.68, reflecting the better than expected results in FYQ1. Based on our revised EPS estimates (excluding GO.com losses) for FY00 and FY01 of $0.75 and $0.90, Disney?s current P/E ratio is 45x and 37x, or nearly twice the P/E multiple of the broader market. We note that Disney has always maintained its premium valuation relative to its peers, even in the midst of several consecutive earnings downgrades. Furthermore, from a growth standpoint, Disney is not among the faster growing companies in the sector. We project operating income will increase 11% in FY00 and 14% in FY01, which is slower than Fox, Viacom, CBS and Seagram, all of which are projected to enjoy faster EBITDA growth over the foreseeable future. Despite the new Viacom (i.e. including CBS), which trades at 19x CY01E EBITDA, both Fox and Seagram trade at significant discounts to Disney, trading at 6x and 9.4x CY01E EBITDA, respectively. n New Management Team On the heels of the success of the ABC Network, Disney appointed Bob Iger as President and COO of the company. Iger was formerly Chairman of the ABC Group and most recently President of Disney International. We believe this is a critical appointment for Disney as it alleviates succession issues regarding. Disney also announced the formation of an executive management team including Michael Eisner, Bob Iger, Sandy Litvack, Tom Staggs, Peter Murphy (both newly promoted Senior Executive Vice Presidents) and the business unit operating heads. The new management structure will help the company focus on its cost-cutting initiatives and continue the turnaround of operating results. n FYQ1 Review Disney?s FYQ1 results were well ahead of expectations, marked by robust growth in Media Networks and a respectable performance from the Theme Park segment. As expected, results were offset by continued sluggishness in Creative Content, driven by declines in both Studio Entertainment and Consumer Products. Overall, operating income increased 9% to $1.12 billion vs. $1.03 billion last year, well ahead of our $934 million estimate. EPS, excluding non-recurring items, increased 8% to $0.25 vs. $0.23 last year and was above our, and consensus $0.20 estimate on a revenue increase of 3% to $6.8 billion vs. $6.6 billion last year. n Divisional Highlights The standout performer in the quarter was Media Networks, with operating income increasing a robust 73% to $642 million vs. $371 million last year, well above our $465 million estimate. Broadcasting operating income increased a remarkable 120%. Both the ABC network and Disney?s owned and operated television station group benefited from the stronger than expected advertising market, as well as the incredible success of Who Wants to be a Millionaire, which Disney is exploiting beautifully and helped ABC maintain the top spot in primetime rankings. Improved ratings at Good Morning America and 20/20, as well as advertising revenue growth at the radio stations also impacted results. ESPN benefited from higher advertising revenues, subscriber growth and rate increases. Similarly, subscriber growth and a healthy cable advertising environment fueled by results at Lifetime, The History Channel and E! Entertainment Television.