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

To: Road Walker who wrote (18779)	1/29/2001 9:16:22 AM
From: Zeev Hed	Read Replies (2) \| Respond to of 60323

John, I think we had a strong indication that something was fishy with OEM in the last quarter, or at least somewhere. We had an extensive discussion about possible "stuffing of the channels" to the tune of some $20 MM. Right now, the DSO seems quite reasonable, meaning IMHO, that the OEM have regained some control of their inventory. The slight problem is a sharp increase in inventories by close to $30 MM. It is my guess that only half of that is due to OEM not taking products, the other half, IMHO, is actually positive, I think it is merchandise on retailer's shelves, possibly already sold (in the last two weeks of the last quarter) but not yet reported and paid to SNDK, because of the delay between the actual sale to the customer and the reporting of the retailers. Unless the retail business falls completely out of bed in this quarter (and think it might actually grow a little), the next quarter could very well be within $10 MM of the current quarter. Earning wise, however, we might have a big swing down of royalties (I would guess between $3 to $5 MM), and that is where we are going to be hit on the bottom line in the coming quarter (these are "pure bottom line numbers). Zeev

To: Road Walker who wrote (18779)	1/29/2001 3:27:12 PM
From: Steve 667	Read Replies (3) \| Respond to of 60323

John, This doesn't make sense. You wrote: I think two things are at play here. One is that the OEM's started cutting back on orders in December, and not issuing new purchase orders, so there is some visibility that SanDisk has into the first quarter, and that is that the OEM's have sufficient inventory to carry them through. December orders would be for the first quarter of this year as you stated. What I am talking about is BELOW EXPECTED PRODUCT REVENUES FOR THE FOURTH QUARTER OF 2000! It was expected to be in the neighborhood of 188 million instead of 154 million. (34 million short) I am not talking about product revenues for this year, 2001! I AM NOT TALKING ABOUT A DECREASE IN ORDERS IN THE 4TH QUARTER! I AM TALKING ABOUT CARDS THAT ALL OF A SUDDEN NOBODY WOULD EVEN TAKE DELIVERY! This is not a slowdown, this is a crash into a brick wall! The economy slowdown didn't even become evident until November. So we go from having twice as many orders as we have cards and can't even fill them til 2001. From there we go to: not only are we now filling every single order from every customer (new and old), but we don't even have enough customers to buy all the cards we have made. All of this in just a couple of months. All this while more digital cameras were sold during the holidays that ever before in the history of the world. Something is rotten in Denmark! What is wrong with this picture? So I take it that customers can now call up SNDK and get orders filled the same days because there are $34 million dollars worth of flash cards just sitting around the SNDK warehouse collecting dust! Am I the only one here? Steve 667

To: Road Walker who wrote (18779)	1/30/2001 7:45:36 AM
From: Steve 667	Read Replies (1) \| Respond to of 60323

John, I just ran into this post from after the Q3 CC: Message 14679749 I cannot fathom SNDK stuffing the channel. Like last Q, Eli again said in the CC that they could sell far more than they can make (I don't remember the exact %, for some reason 40% sounds right). There is better balance between supply and demand though. There is now a two month time lag between ordering and shipping. This was higher in past quarters. In response to an analyst question, Eli specifically said that he does not see this two month time lag improving any time soon. This would indicate that SNDK was still 2 months behind just trying to fill existing orders!!! And Eli didn't see that changing! The mystery continues!!!! Take a look at this post by Jay Dreifus: Message 14681757 Take a look at the sequential growth percentage column! Notice that SNDK has not had a sequential growth percentage increase less than 5 % since Q3 of 1998! So far I have read a lot of rationalizing from the posters here but nothing that really explains this sudden disappearance of product sales growth. A slowing to 18% or 19% can be explained by some of the possible explanations that some of you have posted. BUT NOT A SLOWING TO 2% !!!!! THE MYSTERY IS AFOOT! Steve 667 Something is wrong....Something is VERY VERY WRONG!