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

To: orkrious who wrote (13106)	7/19/2000 9:36:26 PM
From: Road Walker	Read Replies (1) \| Respond to of 60323

Jay, Don't get me wrong, I'm very positive on the company. I just seem to remember after the last quarter that Eli said that 30% to 40% Q over Q growth was within reason. Now, we are talking 20% to 25%, and reading between the lines in the CC capacity growth seemed to be a real "pain in the neck". I hope you are right that guidance is very cautious. I've only owned this company for about six months, still learning. John

To: orkrious who wrote (13106)	7/19/2000 9:39:10 PM
From: Michael Kim	Respond to of 60323

Many thanks to all who heard the CC today and posted notes. I cannot even imagine a better scenario (other than having SEG completely 100% out) for earnings, growth, and prospects than what SNDK has right now. Did get a bit scary today though - now I'm kicking myself for not adding to my position. In any event, long term holders (and 1Q '01 is not that far away) will be handsomely rewarded. Eventually the St. will be educated about the different flash segments. This ain't hard drives, and it ain't DRAM. This is Compact Flash memory - solid state, portable, small enough to stimulate the development of a virtually unlimited number of handheld devices. This will change the world as we know it. All the longs here are among the first to recognize and appreciate this potential. Hopefully, the market will get some CF smarts soon! Best of luck to everyone.

To: orkrious who wrote (13106)	7/20/2000 5:20:03 PM
From: Ausdauer	Read Replies (3) \| Respond to of 60323

My take on earnings. The last quarterly earnings report was stunning and a strong affirmation of the fundamental analysis this Thread has uncovered and synthesized over the past several years. I wanted to thank Jay, Art, Jim, Steve, and all the others who listened in and posted the salient portions of the call for all to review. This was the first c.c. I have missed in two years. Going in to earnings I had several issues which I had pegged as high priority... [ Message 14066379 ] ________________________________________________________________________________ I. Royalty revenues The world-wide build out in fab capacity has had a very positive effect on the value of SanDisk's IP. As one of three segments of the revenue stream, the $21.4 million dollars seems to have resulted from the increased volume shipment of direct competitors who manufacture stand-alone flash memory for card assemblers who also compete with SanDisk. (For simplicity, these may be referred to as "pre-CF" licenses even though some flash components likely find themselves into competitors' CF cards.) The fact that no new licensees contributed to this astonishing figure (and the fact that SSTI, as the only CompactFlash assembly licensee previously announced, likely manufactures a limited number of CF cards) is of great significance to the company and to shareholders. In retrospect, the balance of 2000 and certainly 2001 will likely represent the formative years for flash memory production for the Post PC Era. SanDisk's markets and, in general, many of the markets served by flash are nascent and expected to grow exponentially over the next several years. The $10 million increase in royalties Q-over-Q is an impressive number. I was nearly floored when I read the press release. It clearly reflects the value of the pioneering work for which SanDisk is responsible. Going forward the guidance on the SanDisk royalty stream is very upbeat. As I have offered previously, SanDisk gambled its future on the popularity of digital photography and the promotion of its CompactFlash standard way back in 1995. This investment is now just starting to pay off. As we all suspected, the Judge Breyer's finding in the SanDisk v. Lexar Media patent infringement suit this Spring was a pivotal event. The wording of the Lexar Media SEC registration statement clearly defines the predicament Lexar finds themselves enveloped in. This has SNDK added leverage in ongoing card assembly licensing negotiations with other potential licensees. The fact that Eli even mentioned this fact is of great importance as it has generally been his stance not to comment on ongoing litigation. The Lexar situation remains grim (for Lexar) and should be a deterrent to others who may elect to take a similar strategy against SanDisk... Message 14028337 Message 12905997 II. Cash Flow Cash, short term investments and equity holdings in UMC net of tax now approach $700 million dollars. Net income of $24.3 million is up nearly 4 1/2 fold since the comparable quarter of 1993. SanDisk appears to have sufficient funds to finance the announced fab in Virginia and continues to add to its stock pile of cash with each passing quarter. Those who comment that this cash represents primarily royalty revenues and no significant contribution from operations appear to have a lack of understanding of SanDisk's book of business and have also forgotten to apply the 30% tax rate to the royalty base. This is not only sloppy accounting, but a gross oversimplification of the SanDisk business model. III. Seasonality If Q4 1999 represented retail sales over the holidays, and Q1 2000 represented aftermarket sales from Q4, then what does Q2 2000 represent??? In my opinion SanDisk has left behind its previously seasonal sales pattern. This speaks to the breadth of the markets SanDisk serves and the high demand for SanDisk's flash cards. To no small degree the tandem growth of CF and MMC has levelled out all previous bumps in the road. This should help greatly with analysts estimates and attract new institutional investors who comprehend the central importance of flash memory cards in the Post-PC Era and the telecom build out. IV. Misunderstandings If the quotations for the c.c. are accurate, and I have no reason to doubt their accuracy, Eli and many within the company remain frustrated with the market's current misinterpretation of SanDisk, the technology SanDisk has spearheaded, the markets served, and the competitors they face. We have discussed companies such as SSTI, Intel, and to a smaller degree AMD here on Silicon Investor. Even among informed investors there remains much confusion and cloudiness regarding the segmentation of the flash market. I have to educate new investors about SanDisk's merits in this regard, however the constant churning of shares on the market indicate that the message is still not out. We have had several lively debates here of late as this relates to SSTI... Message 13525002 Message 14066379 I am not sure who is ultimately responsible for "getting the message out". And until the message is out we can anticipate further market volatility, fickleness, stock churning & manipulation and a reduced valuation/appreciation of SanDisk by "The Street". To further emphasize this point, at the time I wrote the summary of the SanDisk Annual Shareholders' Meeting (and cyber-tour) SNDK was trading at $67 5/16. Today we are a few dollars ahead of that landmark after the precipitous fall to $40/share in May. As a result we have only two choices that remain: a) get the word out! or b) continue to accumulate shares until the word finally gets out!!! Personally, I plan to do both. ________________________________________________________________________________ Finally, thanks to Cardin Drake for another awesome prediction. I remained sheepish with my projections, but tried to poke fun at the other analysts with my incessant posts ending like this... 21¢ + 22¢ + 23¢ + 24¢ = 90¢ SanDisk exceeded analyst estimates by about 6 future quarters. The trajectory of growth is simply astonishing. Thanks also to Eli and all the employees of SanDisk for their accomplishments and best of luck with the challenges that lie ahead. Ausdauer "SanDisk...The Big Picture is finally coming into focus."