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

To: wily who wrote (12352)	6/28/2000 8:51:00 PM
From: Ausdauer	Respond to of 60323

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To: wily who wrote (12352)	6/28/2000 9:25:00 PM
From: Art Bechhoefer	Read Replies (3) \| Respond to of 60323

Wily, your assumptions involve projections of existing levels of sales and profits but do not take into account the following: (1) Better chip yields from foundaries, lowering cost per flash unit, (2) Increased production from new plants in Taiwan, as a result of agreements with Taiwan Semiconductor, (3) A non-linear leap in chip production from the Manassas plant, once that plant starts operating, (4) Higher gross margins resulting from efficiencies in existing fabrication. Taken together, these factors should produce much higher net income than you have projected for this year and next year. In addition, there will be additional "one-time" gains from the sale of shares in what was originally SanDisk's investment in the Taiwan facilities. While I do not place too much faith in straight line projections, yours would be more acceptable if you multiplied the results by 2.

To: wily who wrote (12352)	6/29/2000 8:35:00 AM
From: wily	Respond to of 60323

Here's the second revision. I adjusted Y2000 numbers because I had been using 100% y/y growth from 1999, when actually, the latest projections are for an $11B Flash market in 2000 (and I've heard as high as $12B) vs $4.6B in 1999. That equates to 11/4.6 = 139%, which is a big difference from 100% and gets compounded over the next two years of growth. For 2001 and 2002 I've allowed for 50% growth of the Flash market, which I believe is more generous than the numbers that are out there now. I'm also assuming that margins will be maintained at present levels. These are all mere assumptions and are intended as a reference point. (revised-2) Projected bottom line growth for Sandisk thru 2002 assuming: 1) 139% growth in product and license&royalty revenues for 2000. 2) 50% growth in product revenues in 2001 and 2002 from their already established capacity, i.e., not including the Manassas plant. (I don't know if this is valid). 3) 50% growth in license&royalty revenues in 2001 and 2002. 4) Revenues of 250MM in 2001 and 500M in 2002 from Manassas (not sure where I got these numbers -- maybe the 10K?) 5) "profit from products" = 25% of product revenues (after "cost of revenues"). 6) Operating Income(E) is based on the percentage that dropped to the bottom line in 1999 (26.5/94.8 = 28%). This could vary a lot depending on operating expenses, interest income, and taxes. 7) Outstanding shares increase 10% each year as they have the last few years. I haven't looked to see the reasons for the increase, so this may not be valid. 1997 1998 1999 2000 2001 2002 FlashVision Revenues 250E 500E Product Revenues 105.7 103.2 205.8 492E 738E 1107E Total Product Revenues 105.7 103.2 205.8 492E 988E 1607E Profit from Products 33.4 22.9 53.6 123E 247E 402E Royaly & License Revs 19.6 32.6 41.2 98.5E 148E 222E Total Profits 53.0 55.5 94.8 221.5E 395E 624E Income 19.8 11.8 26.5 62.0E 110E 175E Shares Outstanding 49.9MM 55.3MM 61.4MM 67MM(E) 73MM(E) 80MM(E) (diluted) earnings/share .40 .21 .43 .93E 1.51E 2.18E