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

To: Cary Salsberg who wrote (28091)	4/27/2005 1:41:43 PM
From: slacker711	Read Replies (3) \| Respond to of 60323

Well, I would take anything I say about accounting with a grain of salt, but this time I am just repeating what the CFO stated during the 4th Q conference call. media.corporate-ir.net I would like to provide some preliminary guidance on our 2005 fab expansion plans, and the anticipated impact on our 2005 results. We are starting first 300-millimeter wafers in Fab 3 during the current quarter, and expect to complete 300-millimeter qualification with our 90-nanometer 4gigabit chip by the end of the second quarter and start production in the third quarter. Accordingly we expect to incur a substantial increase in R&D expenses in Q1 and Q2. We currently expect that in Q3 these Fab 3 expenses will shift from R&D to COGS as we begin Fab 3 production, resulting in an adverse impact on product gross margins in the second half of 2005, but R&D expenses returning to normal levels. Our current estimates are for R&D expenses to include approximately $15 million in Q1, up approximately $10 million sequentially, and approximately $30 million in Q2. We expect COGS in the second half of 2005 to include start-up expenses of approximately $40 million, likely more concentrated in Q3. We expect to see the first benefits from our Fab 3 investments in Q4, and Fab 3 will become a critical component for sustaining our growth in 2006 and beyond.