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

To: Mike Buckley who wrote (21375)	12/26/2001 9:04:12 AM
From: Art Bechhoefer	Respond to of 60323

Mike, the negative cash flow came from start-up costs at the new FlashVision joint venture, costs in connection with a new plant for embedded flash in Israel, and manufacturing costs for an excess of flash cards that did not ship, or that were written off during that period, owing to lower demand and/or canceled orders. Looking strictly at operations and assuming the costs of transferring production from the Virginia plant to Japan are paid entirely by Toshiba, there is a good chance that SanDisk will have positive cash flow beginning in the first quarter of 2002. This also assumes that the glut of flash cards diminishes on the basis of improving demand, and that manufacturing costs continue to drop. Working against a positive cash flow are the startup costs in Japan and the fact that it is VERY UNLIKELY that production costs in Japan, even from the most modern equipment, can fall below those in Korea, China, or Taiwan. SanDisk is so tied in with Toshiba, however, through the earlier joint venture agreement, that I think they have no choice but to go along with Toshiba and hope for the best. Art

To: Mike Buckley who wrote (21375)	12/30/2001 12:08:37 PM
From: Ausdauer	Read Replies (1) \| Respond to of 60323

Mike, 2001 was a year of consolidation for SNDK... ...after a period of explosive growth during 1999 and 2000. Demand fell off sharply in 2001 and cost-saving measures were instituted to help weather the storm and prepare for the possibility of sustained adverse market conditions for flash during 2002 and beyond. These measures included... *rapidly transforming technology (and product base) from the 0.24 micron NOR flash to 0.16 micron NAND flash, the precocious introduction of NAND/MLC (with 1Gbit densities recently announced), the tough decision to consolidate NAND production at Yokkaichi to further reduce wafer cost, reduction in head count by elimination of assembly and manufacturing operations state-side and centralizing them in China and Taiwan, signing the Memory Stick agreement with Sony, nearly doubling of retail outlets to almost 40,000 storefronts world-wide with an increased emphasis on retail sales, and completion of a $125 million convertible to afford strength to execute SanDisk's long term plan regardless how long weak market conditions persist. I think for those with a longer term perspective and patience that these cost saving measures will eventually pay off.** Aus p.s. Mike, comforting to know you are still following SNDK, even if only peripherally.