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

To: The Prophet who wrote (11766)	6/3/2000 9:27:00 AM
From: Zeev Hed	Read Replies (3) \| Respond to of 60323

The Prophet, I think that the model for Flash was set in the 1995 to 1998 period for DRAM. The critical question is more on what portion of this volume does SNDK get royalties, IMHO. Since capacity additions are usually in quite big "quantas", even very rapid growth in end demand can be rapidly absorbed (some of the big one announced quadrupling capacity, if memory serves), meaning that there will be severe margin erosions. However, if SNDK royalties grows at only half that rate (a factor of 5 from the current base of about $50 MM/year?), we are looking at royalties revenues of $250 MM, which after taxes should be in the neighborhood of $175, or $2.5/share. To that you'll have to add whatever profits (or losses) their actual direct sales will add. Remember that the DRAM industry, in 1998 lost about $5 billions because of excess capacity, despite a growth rate of bit counts in the 70% to 90% annually. Zeev