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

To: Road Walker who wrote (20086)	4/14/2001 3:35:10 PM
From: Ausdauer	Read Replies (1) \| Respond to of 60323

John, regarding the SanDisk IP Clearly Lexar Media walked away with something after the '987 settlement. They got SanDisk to agree to a license regarding SmartMedia cards that SanDisk doesn't even make, they got SanDisk to cough up $2 million dollars in past licensing infringements, they got SanDisk to acknowledge their work around, and now they are getting CompactFlash competitors to purchase or license their controllers. Lexar also stated that SanDisk has the option to license technology for future products. I still don't know exactly what that means. You will notice that the CF companies that Lexar has sued do not appear to be the known Hitachi customers who presumably use both Hitachi ultra-high density flash and Hitachi flash controllers. These companies may be immune to Lexar as Hitachi is a known SanDisk licensee. Therefore, I expect that Hitachi has been paying SanDisk a license for the C-series controller or that a global cross-license between SanDisk and Hitachi might encompass not only basic flash and MLC flash technology, but also the associated controller technology. This would explain Eli's statements in the past that SanDisk has garnered "xyz% of the CompactFlash market and gets a royalty on the rest" or something to that effect. Also, when I asked investor relations of Simple Technology about the Lexar-SanDisk '987 litigation (Simple Technology previously owned the Lexar Media IP), they stated they had switched to Hitachi controllers and flash which were "SanDisk approved" or something of that nature, suggesting they were not subject to any further licensing fees from SNDK. That is, there was presumably a small fee included in raw component (flash and controller) purchases that trickled down to SanDisk through Hitachi. Last Fall I recall Eli stating that the most recent cross-licensing agreements with Hitachi included access to Hitachi's finished product. This may be a situation where SanDisk requests a percentage of output at a negotiated price in advance of production in return for the technology exchange and in lieu of a cash payment from Hitachi to SanDisk. Right now such an agreement must hurt given the inventory backlog and the rapidly falling consumer pricing environment. This will probably be disclosed at the next c.c. Also recall that SanDisk is committed to UMC long term and may have purchasing agreements which also work against the planned inventory workdown. Lexar will either be successful in obtaining new licensees or it may force these same competitors to use Hitachi or SanDisk or other controller technology. Aus