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

To: Robert Douglas who wrote (26289)	7/2/2004 10:45:55 AM
From: Ausdauer	Read Replies (1) \| Respond to of 60323

Robert, Eli stated in the c.c. that the cost reductions were on the higher capacity products... ...I believe. The cost reductions were not across the board. Gross margins are still predicted to be in the 30% range despite this. I don't know if rebates are factored in or whether rebates are accounted for as an operating expense. In any case, SNDK may have take away some market share from competitors and the USB drive business is hopefully growing. I hope digital video and cellphone business is ramping up. Aus

To: Robert Douglas who wrote (26289)	7/3/2004 10:11:12 AM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 60323

Robert, re: cost differences for Lexar and SanDisk. Lexar buys wafers produced by others and has others do the manufacturing of the flash cards. They obviously must pay more for the product than a manufacturer who makes the cards, otherwise the manufacturer would not be interested in Lexar's business. Furthermore, Lexar must pay royalties to SanDisk on at least some of its products, especially those that use the "SD" format. So that is why Lexar margins are unlikely to be as good as SanDisk margins at a time when growing demand pretty much soaks up the supply. If there were a period when everybody was stuck with excess inventory, as happened in 2000, due to double ordering, then Lexar would fare better. Art