To: Zeev Hed who wrote (11769 ) 6/3/2000 9:57:00 AM From: Ausdauer Read Replies (3) | Respond to
Zeev,"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." first profitable quarter based on operations alone (with royalty payments removed from the equation) and now you are suggesting that direct sales may lead to losses despite the excellent bookings, announced tripling of capacity, the migration to 256Mbit/D2 and upcoming die shrinks. I think that is unfair. It does not reflect any of the guidance given at the Shareholders' Meeting.they seem to be proceeding in a fairly consersative fashion with the current die shrink. You also did not comment on the feasibility of higher orders of MLC technology as described in Dr. Harari's last interview that we posted this week.Help us put things into perspective rather than casting doubt on flash's prospects.
