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

To: Art Bechhoefer who wrote (15861)	10/22/2000 12:08:12 PM
From: orkrious	Respond to of 60323

I think the significance of the slightly lower projection for Q4 of $17 million, down from about $18 million or so, reflects simply the wish to exclude one-time licensing fees from any estimate of future fees. Art, no disagreement from me. Note though, that the Q3 royalty guidance was $17-17.5 million, and actual was $19 mil. Now the guidance is $18 mil, so you can figure that royalties will be $19.5-$20 million in Q4, plus whatever fixed costs they get from new licensees. This (the actual coming in $.5 to $1.0 above the guidance) was specifically alluded to by Eli during the CC in response to a question about royalties. Now, with royalties which flow directly through to the bottom line growing 5-10% sequentially, sales increasing 100% a year, and margins improving each quarter, how do you get a stock price with a rolling PE of 40? It doesn't make sense. Jay

To: Art Bechhoefer who wrote (15861)	10/22/2000 1:39:47 PM
From: Ausdauer	Read Replies (3) \| Respond to of 60323

Art, *First, thanks for explaining the TSEM relationship. I think this investment is the easiest to understand as the original USIC fab investment serves as a prototype. But could you please clarify the accounting principles for the FlashVision LLC and Digital Portal JV's? Second, you stated that... "You can't predict when a license, or if a license will be granted, but you can estimate a continuing royalty stream." I hate to be repetitious, but it would have been nice to have a clarification of the overshoot in Q3 royalties (by $1.5 to $2.0 million), a generic summary of the CompactFlash licensing strategy, and a roughed out time schedule for the same. Eli could have said something like... [the following is not based in fact and is written simply for example.] "We had an addition $2.0 million in licensing and royalty revenues due to a one-time payment from TDK and the cross-licensing renewal by Hitachi, which now includes both binary and MLC technology. We anticipate an ongoing, revenue-bearing relationship with TDK for their flash card products as a result of this new license and a combination of licenses and production considerations from Hitachi." I think that even some preliminary plans regarding licensing would be well received by analysts. SanDisk needs to emphasize the importance of both the IP and the manufacturing capabilities for the future. I noticed this weekend that BestBuy is now selling Lexar Media, Simple Technology, SanDisk and Memorex (yes, Memorex) CompactFlash cards. There are no 64 MB SanDisk cards on the shelves, but Memorex has them in stock at $149.99 a piece. Also, Simple Technology always seems flush with product. I imagine this is not due to stagnant sales, but rather a full pipeline of flash capacity as the product packaging has been redone and is replacing the older versions of merchandise. **Finally, the Lexar Media patent nullification trial is now set for early November. You wonder if Lexar Media asked for the trial to be postponed, but only got 2 weeks or so out of the maneuver? The SanDisk lawyers need to drive a stake into the heart of Lexar Media. I am certain this would help to catalyze other cross-licensing agreements. Ausdauer@we_need_a_licensing_catalyst.com