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

To: JRI who wrote (18521)	1/24/2001 10:36:30 PM
From: puborectalis	Respond to of 60323

SanDisk Beats Estimates, but Sees First-Half Slowdown By TSC Staff 1/24/01 7:45 PM ET SanDisk (SNDK:Nasdaq - news), a supplier of flash memory data storage products, reported fourth-quarter earnings that beat analysts expectations, but the company warned of a pending slowdown through the first half of fiscal 2001. Fourth-quarter income rose to $29.5 million, or 41 cents a share, from $10 million, or 15 cents a share, in the year-ago period. According to First Call/Thomson Financial, analysts expected the company to earn 37 cents. Revenue more than doubled to $177.7 million from $82.8 million in the fourth quarter of 1999, but came in below internal projections. Product revenue rose to $154.7 million from $69.9 million. SanDisk said current market conditions are "likely to adversely impact the first one or two quarters of 2001." The company is "taking aggressive steps to manage our flash production output. We are actively managing our inventory and we expect it to return to historical levels by the second half of the year." The company expects first-quarter product revenue to fall 15% to 20% sequentially, with earnings per share "approximately in line" with the year-ago period, excluding a one-time gain. The company also forecast that revenue in 2001 would grow about 30% above the $601.8 million reported for fiscal 2000. The company expects fiscal 2001 earnings per share "to grow slightly" from $1.30 a share in 2000. Analysts expect SanDisk to earn 33 cents in the first quarter, up from 21 cents last year, and $1.52 for 2001.

To: JRI who wrote (18521)	1/25/2001 9:23:35 AM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 60323

JRI, a recent earnings consensus for FY 2001 was $1.52/share. If you exclude the one-time gain from the foundry investment and pro-rate the income taxes accordingly, you get about $1.60 per share for FY2000. That indicates to me that the earlier consensus for 2001 earnings was on the low side, even after taking a pessimistic view of a slowing economy in the first 2 quarters this year. If revenues increase by 30 percent (the low end of estimates by SNDK) for the year, and if margins drop a little, as expected, then it's likely that earnings would grow 20 percent, at the very least. Thus, while I don't find it too useful to estimate earnings, if I were estimating earnings solely from operations and licensing/royalties, I would look for something around $1.90 to $2.00, excluding any one-time gains or extraordinary events. Given other indicators in growth in demand for products that may use flash memory, I would be more comfortable with operating earnings estimates closer to $2.20, but that figure is based on information not discussed at the conference call. Art