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

To: TREND1 who wrote (16175)	10/28/2000 12:33:15 PM
From: Zeev Hed	Read Replies (3) \| Respond to of 60323

Hi Larry, how have you been? I am not sure how they arrived at a forecast of earnings for the fourth quarter which is lower than the third. After all, a lot of SNDK sales go to consumers and their Christmas binge should make the fourth quarter outstanding. However, since a big chunk of the profits in the last quarter ($25 MM) were "non operational" (Royalties and interest), maybe that forecast is not far from what SNDK will deliver. If that is the case, then there is a real QOQ slow down in growth (QOQ profits rose less than 10%). I would guess that interest income may come down a little (as they buy their share in TSMC) but I have no way to estimate their Royalties income. One of my concerns is the relatively high DOS reflected in almost a full quarter of sales reflected in Accts receivable, that often is an indication of "channel stuffing", meaning that possibly a chunk of the Christmas bulge might already be reflected in the last quarter's top line. That would be unusual in the era of "on time inventories", but why are DOS at close to 90 days? Another concern is the relatively thin margins, if you take out the $25 MM in "non operational gross profits, you are left with about $15 MM in operational profits and that is barely 10% of product sales, not a healty enough gross margin if this sector proves to have similar cyclicality as the rest of the industry. Technically, the whole SOX stinks and I fear that we still have a lot to go down before next spring, so right now, apart of some spirited runs, th trend is still down. Mind you, the break in some other SOX leaders might indicate that a real slow down in the sector is indeed upon us. I have been suggesting that such a development could occur, first for the semi equip, and then the chips since last April. Maybe it is upon us? Zeev

To: TREND1 who wrote (16175)	10/28/2000 3:13:59 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 60323

Larry, looking at your web site, I'm not sure whether the red means bad or just bad data. I'm inclined to think it's the latter. While I don't put much value in predicting quarterly earnings, I think that if one reviewed the estimates given by SNDK at its most recent conference call, noting expected earnings from products as well as royalties and licensing fees, a figure of $0.40 would be conservative. I don't know where the lower figure you show comes from or how it was calculated, but something looks amiss. Art