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

To: Steve 667 who wrote (11938)	6/13/2000 8:27:00 AM
From: Ausdauer	Read Replies (1) \| Respond to of 60323

SSTI vs. SanDisk I am not investing in SSTI for reasons other than EPS. If you wish to make an argument based on EPS growth, please also comment on the current tax rate for SSTI. Recall the differences in target markets between the companies. They don't overlap currently, so holding both companies may not be a bad play. As Joe pointed out, this may create a bit of a lopsided portolio. In the long run I see SSTI's biggest problem is the fact they have licensed their technology in return for production capacity. This seems a bit focused on near-term success, rather than long-term growth. SSTI is destined to remain fabless and I believe there is a risk to that. Second, despite the advantages of Superflash with respect to scalability and lower cost manufacure, if target applications continue to demand more in the way of capacity there are other stronger competitors in the field (AMD, Intel,...) who may have more resources available to meet the challenge. I also see the lower density embedded market as more crowded than the upper end (where SanDisk lives) where the technological limits are continually challenged and advanced. Ultimately some of these leading edge producers may have embedded products which can compete favorably. Tight supply lines currently allow SSTI to flourish as competitors are distracted. I think the way in which SanDisk leverages its IP, their FlashVision JV to guarantee in-house production needs for the intermediate term (late 2001) and beyond, their focus on consumer megamarkets and their ability to enter/threaten/supply the lower end of the flash spectrum at their chosing is a distinct advantage. Entering the upper-end of the flash market is just not a reality for SSTI for the present time. It appears to be a one-way street. Finally, to return to the EPS estimates, I think SanDisk's strength or weakness will be revealed in earnings next month. I simply don't see how a 30-50% increase in capacity Q-over-Q will translate into only a penny's worth of additional EPS in Q2. Also, we need to have an idea about the trajectory of the royalty growth as Eli was quite boistrous about royalties in the On24 interview. There may be something cooking there. Ausdauer

To: Steve 667 who wrote (11938)	6/14/2000 4:13:00 AM
From: DukeCrow	Respond to of 60323

Analysts cannot be trusted as an accurate gauge of growth when comparing SNDK and SSTI head to head. Here is my rudimentary break down of both companies' growth. SSTI's yoy revenue growth is ~207%; SanDisk's is 148% (product revenue is growing 171%, license and royalty revenue is growing at 48%). At first glance, one would think SNDK is growing more slowly than SSTI. However, with revenue growing as fast as they are in both companies, I find it more telling to look at sequential revenue growth. That should give a better picture of growth going forward. SSTI's seq revenue growth in 1Q00 was 29% down from 38% seq growth in 4Q99; SanDisk's was 32% in 1Q00 (product revenue is growing 39%) up from 23% in 4Q99. This tells me that SanDisk is probably the one which will grow faster going forward. This is just my simple breakdown of the numbers. Analyst estimates for SanDisk seem absurdly low. I'd be very surprised if SanDisk doesn't blast through those numbers. Of course, knowing the analysts they will probably raise their estimates a couple of days before earnings are released. Ali