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

To: Michael Young who wrote (1106)	10/26/1997 8:10:00 PM
From: Rex Dwyer	Respond to of 60323

Nice, simple question, here's a brief answer (not). SanDisk Flash is different than Intel's mainline flash products. Jerome here is more of an expert than I am. But I think I can give a "users" description of the differences. Intel mainly makes "Linear Flash" which is set up like normal memory. Every cell functions, and you can write to it randomly like a normal memory IC, except that it is non volatile. The FlashDisk, or ATA interface, makes the flash memory look just like a disk drive. You send a file name and the data to the flash drive and it stores it where it wants to. It gets "formatted" to avoid bad sectors, thus not needing 100% yields on the die. The standard linear flash would be used for internal memory. There is another form of Flash sold in the "Miniature Card" form factor. It is backed by Intel and AMD among others. It is like the CompactFlash except that it needs special firmware in the host to treat it like a flash drive, just as the CompactFlash needs to have a microcontroller on board to handle the disk drive like functions. As memory capacities get bigger, the microcontroller portion of the Flash disk will get smaller and less of an overhead. So, I think that older, embedded flash digital cameras could have had Intel flash in them. But they now are going with the removable type of memory (CompactFlash or Miniature Card)to boost capacity and to lower the camera cost. If Intel starts to produce the CompactFlash, then they pay SanDisk royalties through their cross licensing agreement. The key here is that a de-facto standard is appearing that will be hard to design out. CompactFash is winning. We haven't even started to see the HPC design-ins begin to draw revenues. Palm tops may also begin offering CompactFlash slots. Here's a good Jerome post on the subject. techstocks.com Here's a post on my latest feelings. techstocks.com Below is what I have sent to my e-mail list over the past 3 months. Rex -------------------------------------------------------------- (SNDK) SanDisk $13 (5/28/97) $13 1/4 (6/23/97) $17 7/8 (7/11/97) $38 (10/8/97) Big news on patent fight with Samsung. SanDisk wins. If you have bought a digital camera for taking pictures to send over the Internet, then this is the stock to own. They make flash memory for large nonvolatile data storage. It is a static flash memory that holds the data even when power is off. Their memory is cheap because it is used in applications where the memory doesn't have to be written very quickly. They use a disk drive style of storage where some sectors are blocked out as being damaged. In this way, the memory chips don't have to be perfect. The yield in production is much higher. They can push the process to get much higher densities since they can tolerate a few errors. They have a conservative strategy in that they are playing the consumer side safely by aligning themselves with huge semi manufacturers, taking royalties instead of trying to beat them in the manufacturing game. We are designing them in our product. Digital cameras are using the product. If digital cameras take off, SNDK will rake in the royalties. Digital cameras should make this product a standard format for bulk memory, which would lead as the next standard interface (like PCMCIA). Many camera design-ins have been announced. We'll have to wait for revenues to take hold. Stock is relatively cheap. Its at a P/E of 21 on fully taxed earnings (SNDK @$11 1/2). Its all-time high has been slightly over $30. Goals (4/97): Let it ride till $25 if no news. Reevaluate if sales take off. Sell if competition appears (I'll be watching out). Reevaluation(9/5/97): No competition yet. All flash makers are offering their format and paying royalties. Digital cameras will be big this Christmas. CompactFlash is becoming the next interface standard after PCMCIA. Hold the stock as the revenue growth explodes. In-Stat says 9.8M flash cards should be sold, up from 108,000 in 1996, that's about a 9,000% increase in volume. This has Iomega written all over it. Lets reevaluate in December or January. WARNING: The information above is not guaranteed for accuracy. I am an amateur analyst. I can make mistakes. Please read later posts in case estimates change or mistakes are found. One should not invest based on this information alone. Do your own research. There are large risks in stock trading. I will not be held liable for any losses caused by taking my advice. I usually have positions in the stocks I mention. I am not a certified financial planner. Please consult a certified financial planner to determine if you can afford to lose any money you may invest. I do not have any contact with management to guide estimates. This is not a solicitation to buy or sell any security. It is to allow me to get constructive feedback on my securities analysis.

To: Michael Young who wrote (1106)	10/26/1997 8:17:00 PM
From: Rex Dwyer	Read Replies (1) \| Respond to of 60323

I have seen how you have advised, correctly, that it is a high P/E company which can easily fall. I agree. However, I have held because of the special nature of this exploding market. I don't like to pay Uncle Bill Clinton more than I have to in cap gains. Again, I am waiting for the 100x sales increase. We already have about a 5x increase, so only two more 5x increases and we are there! Rex PS, are you really one of those MFxxxx guys on the Motley Fool? If so, do you post on SNDK threads? If you like any info I have given you, please post it on AOL, but please give me some credit!