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

To: Art Bechhoefer who wrote (20469)	6/22/2001 10:51:21 AM
From: Ausdauer	Read Replies (1) \| Respond to of 60323

"The only thing that's clear is that Lexar doesn't THINK it or its licensees are infringing any SNDK patents." Art, as you know, SanDisk has acknowledged the Lexar workaround and has agreed not to pursue any measures that would remove Lexar's product from retail shelves even if further patent disputes were to erupt. Lexar is going to make money by selling controllers or licensing controller technology to competitors. This will decrease their exposure to falling retail ASP's. Component sales (controllers) add another facet to their business. They will certainly continue their own branded line of flash cards, but the exposure to shifts in raw material such as flash memory chips is diffused (and aided by "consignment" agreements). As more licensees sign up with Lexar our chances of seeing '987 licensees evaporate. Thus we will have less and less potential for licensing revenues and more of a dependence on card sales at retail. The deal with Solectron has the potential to eliminate some of SanDisk's OEM business with the telecoms if Solectron is able to bundle contract manufacturing with component sales, of which flash cards or flash disks is included. What we have in our favor will be vertical integration, competitively priced products and a migration path to smaller form factors such as MMC and SDMC. Also, all of the card assemblers will need flash from someone and that includes the possibility of future relationships with FlashVision. I am starting to see SanDisk more and more as the Orville Redenbacher of CompactFlash. It would appear that pricing will be the only distinguishing factor as the business model evolves further and further away from technology licensing and more toward volume production for retail sales. Aus