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

To: drew_m who wrote (14650)	9/9/2000 9:46:51 AM
From: Ausdauer	Respond to of 60323

I think Lexar has set a pattern with its lawsuits. In response to the '987 infringement they have sued SanDisk 3 times. The first case is the "click-to-click" chart that compared some of the earlier digital cameras' performance using cards from both manufacturers. I think SanDisk was trying to point out that microprocessor technology in the digital cameras themselves was lagging, not that SanDisk was a superior product. In my observations I have been impressed that SanDisk never used write speed to leverage its sales and it was generally known that Lexar had better write speeds to begin with (they hyped with their 4x and 8x designations). If anything, Lexar misrepresented their card speeds by leading consumers to believe that their cards were four to eight times faster than consumers. And if you recall what the digital camera market was like two years ago you will remember that the floppy Mavica was the best-seller; a camera that required 10 to 12 seconds between shots!!! Even when Eli discussed write speeds at the 1999 Annual Meeting he indicated that the primary concern was reliability and compatibility in the diverse product line that SanDisk was serving. SanDisk had a "10 Million Picture Guarantee" that appeared on the product labels and reflected their commitment to quality. Lexar later had a magazine ad that promised a "10 Zillion" image guarantee, clearly a blatant attempt to poke fun at SanDisk's products. I think this underlines the low level of professionalism at the Lexar corporate headquarters. The second lawsuit against SanDisk and the CFA was related to the initial denial of USB functionality as a CF standard. I believe Lexar was trying to prove that SanDisk unduly influenced the governing body of the CFA to reject the USB standard. The argument against the standard was that most felt currently available USB-based card readers were sufficient and that Jumpshot! (coupled with an embedded USB driver in the CF card?) didn't really add much. The CFA was also concerned that a new USB standard might confuse consumers, especially if standard (non-USB enabled) CompactFlash cards did not work in Jumpshot! In any case, it appeared that rather than availing themselves to remedies such as resubmitting the USB-enabled card for review and reconsideration with the CFA, Lexar decided to piss everyone off by suing the CFA. As it turned out the CFA approved the USB-enabled labelling anyway. Funny thing is that Lexar is the only company who uses the technology and they have had to bundle the Jumpshot! cable with their CF products as a freebie. No wonder they haven't reached profitability yet. The latest suit is perhaps the most ridiculous. Lexar is suing SanDisk over a product that they don't even manufacture. Toshiba owns the IP for SmartMedia. Why didn't Lexar just sue Toshiba??? I THINK THE ANSWER IS AS PLAIN AS THE NOSE ON YOUR FACE. TOSHIBA IS A MAIN SUPPLIER OF FLASH CHIPS TO LEXAR AND A LEXAR INVESTOR. TOSHIBA PURCHASED AN INTEREST IN LEXAR FROM SIMPLE TECHNOLOGY SEVERAL YEARS AGO. IT COMES DOWN TO "DON'T BITE THE HAND THAT FEEDS YOU". Once this becomes clear to the court the whole suit will be found baseless and unsupported. I hope they are penalized for their frivoloty. Ausdauer

To: drew_m who wrote (14650)	9/9/2000 10:19:00 AM
From: Ausdauer	Respond to of 60323

Regarding the Lexar and Toshiba relationship... From the LEXR registration statement: Transactions with Stockholders Toshiba America Electronic Components, Inc. In June and July 1997, we received a cash advance for working capital in the amount of $400,000 from Toshiba America Electronic Components, Inc., a holder of more than 5% of our common stock and, from May 1997 until September 1999, a shareholder with rights under our articles of incorporation to elect a representative to serve on our board of directors. The advance bears interest at a rate of 5.5% per year and is payable in July 2000. As of June 30, 2000, the total amount outstanding, including accrued interest, was approximately $404,000. We have repaid this advance with the funds from our term loan with Access Technology Partners. Toshiba is also the guarantor of a promissory note that we sold to MetLife Capital Corporation in the aggregate principal amount of $348,423 which is more fully described below. On April 15, 1998, we entered into a Consignment Agreement with Toshiba for the supply of flash memory. In 1998, we purchased approximately $5.3 million of materials from Toshiba pursuant to this agreement and, as of December 31, 1998, had payables to Toshiba of approximately $1.8 million. The agreement had a one-year term renewable at our option, and we renewed the agreement with Toshiba in April 1999. In 1999, we purchased approximately $18.5 million of materials from Toshiba, and as of June 30, 2000, we had payables to Toshiba of approximately $1.7 million. Our agreement with Toshiba was negotiated at arm's length and contains terms no less favorable to us than we could have obtained from unaffiliated third parties. _________________________________________________________________________________ Also, as I have posted previously... 3) Simple Technology's current owners sold 10% of their company to Toshiba in 1997 and the remaining interest to the "employees" of Lexar Media at the time of divestiture in late 1998. Message 13369885 Ausdauer