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

To: The Prophet who wrote (14848)	9/18/2000 8:39:16 PM
From: EJhonsa	Read Replies (1) \| Respond to of 60323

Nice math work, but there's one flaw in it: .03x = SNDK royalties (.3x 10%)* The company said that royalties were 10% of total revenues, not 10% of non-royalty revenues. Given the numbers you presented, royalties were 1/9, or 11.1111(towards infinity)% of non-royalty revenues. Now, substituting 11.1111% in for 10% in the line quoted above, the final formula is .7x * y = .3333(towards infinity)x. With this formula, y, or the royalty rate Sandisk gets on third-party flash card sales, is equal to roughly 4.76%. By the way, your analogy to QCOM's handset division is not quite applicable yet as SNDK enjoys a lead in proprietary technology called multilevel cell technology which allows them to build flash at 30% margins. I found the following paragraph in Sandisk's 10-Q: We also face competition from products based on multilevel cell flash technology such as Intel's 64 megabit and 128 megabit StrataFlash chips and Hitachi's 256 megabit multilevel cell flash chip. These products compete with our D2 multilevel cell flash technology. Multilevel cell flash is a technological innovation that allows each flash memory cell to store two bits of information instead of the traditional single bit stored by the industry standard flash technology. In the second quarter of 1999, Intel announced their new 128 megabit multilevel cell chip and Hitachi is currently shipping CompactFlash and MultiMediaCard products employing their multilevel cell 256 megabit flash chip. In addition, Toshiba has begun customer shipments of 32 and 64 megabyte SmartMedia cards employing their new 256 megabit flash chip. Although Toshiba has not incorporated multilevel cell flash technology in their 256 megabit flash chip, their use of more advanced lithographic design rules may allow them to achieve a more competitive cost structure than that of our 256 megabit D2 flash chip. biz.yahoo.com Are there any particuar reasons why Sandisk's D2 multicell technology gives them an advantage in terms of cost/performance/power usage when compared to the competition? Also, has Sandisk's current 30% share given them economies of scale that have allowed them to undercut the competition? Ausdauer, going back to your reply to my post, a commodity market in which Sandisk has key undelying intellectual property's fine, but if the royalties generated from third-party sales aren't as high as the profits from product sales, then it's better if Sandisk ends up operating in a non-comoditized market where they're capable of developing competitive advantages against rivals as well as collecting royalties from them. Once again, any info. regarding potential competitive advantages on Sandisk's part would be appreciated. Eric PS - I sent an e-mail to Infineon's IR department regarding who the supplier is for the Siemens SL45, and one to Sandisk's department regarding the MMC assembly issue. No response from either so far.