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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: A.J. Mullen who wrote (10561)	4/20/2000 11:18:00 PM
From: Zeev Hed	Respond to of 60323

You must also subtract "overhead" Like R&D, Selling and General administration, in the last quarter that was $24 MM, then add interest and apply a tax rate like 38% to 40%. Thus in the last quarter operating income was really just about $5 MM ($17 MM less $12 MM Royalties). Hopefully, R&D and SG&A are growing at a slower rate than sales, thus earnings should grow faster than the growth of sales (providing gross margin are the same or increase). I think that Cardin's analysis maybe generous on the gross margin growth, but possibly conservative on the royalties growth, after all, royalties have grown by 50%, and I see no reason why that growth rate should slow down since end demand (supplied partially by other licensees) is growing probably at about 40% to 50% as well. Zeev