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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (41061)	4/16/2004 12:54:58 AM
From: Johnny Canuck	Read Replies (2) \| Respond to of 70491

LEXR CC: Projecting 800 mill in rev for year, up? for year GM declined faster than expected in Q2 Op Ex was 11 percent of rev, less than expected 2 new patents in Q, total of 72 to date 4800 stores carrying product, up from 4200 last ! 39 percent q-q rev growth in Europe Austrilia and China now have sales staff, expect to gain traction during year Top position in flash drives, 7 points ahead of number 2 competitor Will go to trial with Toshiba ligigation this year Overall Rev down 7 percent q-q Product rev down 7 percent q-q 57 per North Amer 29 per Euorope 14 percent for Japan and rest of world q-q rev growth in all regions except North Amer retail sales 88 percent of rev controller sales 12 percent of rev Licensing rev down q-q down to 3.7 mil from 4.6 mil q-q and 4.4 mil y-y licensing rev should be about 1/2 million per Q for rest of year year GM for product 15.7 perc down from 21.9 perc q-q, 20.5 perc y-y Overall GM of 17.6 per down from 23.9 perc q-q and 26.8 y-y Decrease in GM due to cost increases, product mix and decrease in royalty rev Decrease 5 perc in ASP in q Op Ex 11.2 per versus 11.4 perc q-q Op Ex decrease due to freight cost lower R&D down to 2.1 mil Decrease in SGA q-q due to .... 89.4 mil shares out, will be same next Q 6 perc tax rate, due to loss carry forwards rest year tax rate 32 percent cash up 2.7 mil to 173.4 mil AR down 12 perc DSO 48 days up from 40 day q-q inventory 107.2 mil versus 99 mil q-q Guidance: Transition from camera to camera, flash drives and cellphones growing faster the competitors goal of 60,000 store fronts by end of year Sizeable 20 percent price decrease from competitor, curious move as it does not see more cards, need to sell more cameras see move due to excess supply in their inventory responding to price move gaining share without cutting prices, but will not sit idly by coming to end of tight flash period, expect industry balance to comeback into line partnered with Samsung, number one NAND memory supplier in world seeing really semi companies entering flash market expect 10 bil market in a few years see impact later this year, expect true commodity product in 2005/2006 lower price increase denisties shipped only Saw major price moves last years, left competitor short of supply Rev 194 mil in next q, 14 percent q-q GM decline due to price competition hard to predict, expect it to be down Op Ex will be 11 percent of sales Year Rev outlook 800 mil or more 60 cent for year EPS, excludes additional license rev Q: Rising inventory in lexr requires move in price, but why such a large drop give stable retail pricing A: Expect some cost reductions that did not materialize, rise in flash drive in mix (lower GM), pricing issues on SD parts had effect. Q: Another hundred based point decline to 11 percent possilbe. Would require double product margin in 2H to reach 60 cent for year EPS? A: Some customer are now on consignment. Product is price protected as a result. Past this would have been off balance sheet. Rest of year margin: In past had 20 percent margins for many Q's. Expect GM decrease in Q3 anyway. Was accelerated by one Q. Suppliers will sell flash memory, anticipating re-alignment later in year. New suppliers will restore GM later in year. Have long term supply contracts to access good capacity. Q: How much of spread will be due to price protection on inventory? A: Have a reserve for price protection in Q1. Did not mention it explicitly. major quesition is how fast price come down to meet the new reality. Q: In Q3 and Q4 things were very tight, yet did better GM. In last year LEXR bought 30 percent of Samsung capacity. So why decline in GM. Preferential pricing does not seem to have any effect. A: No comment on pricing others are getting. Thought industry supply would be more in balance in Q1. Still think Q1 is still a strong Q. Q: Q2 GM is strictly due to price decrease from competitors? A: Will not be left behind. Don't want to decrease price if not necessary. Competitor chose price to gain share. Q: Q3 going back to 20 percent GM? No worry about mix and other factors? A: Don't know exact timing. Expect it to be sooner rather than later. Q: Why confident of 60 cent eps for year? A: Samsung has 60 percent of NAND market. SNDK owns half a line and a fab. They own significantly less than that. Most Samsung customers need re-alignment to survive. Samsung will have to re-align to price pressure. Samsung can spend 5 to 6 bill a year in cap ex. Need to make good money when supply is tight to re-invest in capacity. Expect efficiencies to improve cost structure. Q: Why do you expect the Samsung will drop prices? A: Money in NAND is still better than DRAM for margins.Going forward NAND will have more impact than DRAM. Q: Litigation? Toshiba and ???? Timnig of settlement? A: Toshiba will go to trial this fall. Have 10 patents. No patent cases this year. Will be next year. Most flash cards infringe on our patents. Expecting more patent rev. Q: Fundamentals of still tight supply overall. 5 percent overall price reduction. Other factors? A: Price protection obligation in Europe. Growth in lower GM Jump drives. Still have price protection in Q2. Uptick after that. Suitable price drop in q in Europe and Asia. North Amer saw price draaw just last week. Q: Bit growth from suppliers in Q2? A: Can source from many suppliers. Think we have access to all densities we required. Last year saw competitors did not have access to sweet spot densities. Q: SNDK did cut price in Q1 of 2003. How quickly did NAND price adjust to that cut? A: Very quickly price reaction. Can't tell you when the price decrease will occur. Expected to decline in Q3. Was earlier than most expected. Q: Samsung stated they expected Q2 prices will fall. Given that this is know, why not a fast reaction to lower ASP's. A: Hard for us to say. Will pass on price decreases as they occur. Q: Will elasticity cause re-bound in sales in Q2 to meet guidance? A: Taking down in Q2 guidance to 190 mil. Had a higher number before. Q: Full year is better than expected in guidance. Why? A: Increase in Intl sales. New products with greater densities. [Harry: Overall I am not sure I buy their rationale for confidence of an up tick in GM in 2H. I don't know the product line of this company very well, but from what I have seen of the Flash products, there is no significant barriers to entering the market. At least nothing that is dramatic. I need to look at this more closely.]