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

To: Art Bechhoefer who wrote (25360)	3/15/2004 6:48:10 PM
From: Pam	Read Replies (1) \| Respond to of 60323

Art, I was referring to the new fab they are planning to build in Japan with Toshiba and not with Tower. My feeling is that the decision about the timing when it will go into production should be made after they have a good handle on how much capacity is coming online. By the way, if they do decide to go on with the plans to invest in Fab 3 (FlashVision) SNDK will need to raise more cash down the road. I didn't pay much attention to stolen shares. It was unfortunate and SNDK has quickly written-off what they thought they couldn't recover and have moved on. I agree, there are a lot of factors other than bit growth rate and ASP that will help determine the profits for SNDK but they will be the major variables as I see it. Although, I think SNDK rev guidance looks achievable if they can have strong first half where the supply is tight. I also think, SNDK can make approx 140mm in royalty/lic revs and gross margins this quarter will be good because they are now making xD and MS products in-house. But keep in mind that 2% in GM last year came from selling products that were deemed obsolete and previously written-off. We will not have the benefit of that margin improvement this year, hopefully not. On the brighter side, I like what the company is doing- creating new markets which are not affecting existing markets significantly. For ex. Shoot & Store is not going to cannibalize the high-end market but attacks Kodak's film market in a way. I think, the T-Flash could be a big winner next year if we can have Nokia and Samsung come aboard. Imagine if we have a 20% penetration by next year (this year we will not have sig amount in sales from T-Flash) in the 580mm units/yr cell phone market, we could have have a significant revs and the next year Revs can have a good growth from the current year. About the excess capacity, Art, I think we will find out very late in the game. Eli and company probably have a good idea based on what MU, STM and others are sampling them. If they can successfuly manufacture the chips using .13 or .11 micron technology by yearend, it will get really bloody. Only thing that I have read in the press is STM/Hynix can get 5-10% of the Nand flash mkt by year-end. Of course the royalty/lic issues will help Sandisk but it will get ugly. Pam