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

To: TREND1 who wrote (16206)	10/29/2000 2:52:33 PM
From: Art Bechhoefer	Read Replies (2) \| Respond to of 60323

Larry, the estimates for fourth quarter product revenues discussed at the conference call were from 15 to 20 percent above the third quarter results. Gross margins were expected to increase by about 1/2 percent. Licensing and royalty fees were expected to be down by about $1 million. Putting all this together implies fourth quarter earnings around $0.42 per share, making total earings for the year about $4.12 (including a one-time gain from the sale of stock). Looking forward to 2001, first quarter earnings should be a little less than the current quarter, on account of seasonal factors. Earnings should pick up considerably in the second half of 2001, once production begins at the new plant in Manassas, Virginia. On this basis, I estimate 2001 operating earnings (including royalties and licensing fees, but not any one-time gains from the sale of stock) at in a range from $1.80 to $2.10. That estimate is probably still on the conservative side, considering that earnings are now about three times what they were last year. None of my estimates include any compensation from the Lexar lawsuit, which SanDisk probably will win ultimately. Also, they don't include any adjustments to intrinsic value from gains in the market value of Taiwan Semiconductor stock or Tower Semiconductor shares held by SanDisk, both of which are likely to go up. Given the uncertainties in the markets, caused mainly by institutional investor fears about investing in companies like SanDisk, I have no idea where the price of the shares could go, but I do believe the probability of reaching 100 is much greater than the probability of dropping further to 42, as you suggest. Art