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

To: Michael A. Gottesman who wrote (2438)	1/21/1998 4:55:00 PM
From: Mike Winn	Read Replies (2) \| Respond to of 60323

Overall, the Dr's tone is upbeat. I think the future of Sandisk is secure enough that it deserves upgrades by the analysts tomorrow. ''The fourth quarter of 1997 was an excellent quarter with record revenues and net income. Total CompactFlash megabytes shipped grew 24% from the prior quarter on a decline of 13% in units shipped, due to a shift to higher capacity cards. This past Holiday season was our best ever, and we believe that more CompactFlash cards could have been sold had more of the higher resolution digital camera models been available on store shelves. Harari also stated, ''Despite ongoing weakness in the Japanese market and considerable pricing pressures from Asian competitors, we are experiencing strong design-in activity for our CompactFlash, ChipSets and MultiMediaCard products in numerous consumer, industrial and communications applications. These activities make us optimistic about 1998 as a whole.'' But profit margin has decreased. License and royalty revenues grew by 18%. Overall gross margins were 43.4% compared to 44.3% in Q3'97, while product gross margin decreased to 31.6% from 33.4% in the third quarter due primarily to competitive pricing in the market place. A little bit of warning from the Dr. Consistent with the seasonal nature of SanDisk's business, most notably in the consumer markets addressed by CompactFlash, the Company anticipates that revenue in the first quarter will decline modestly from the record level in the fourth quarter. Backlog at the end of the fourth quarter was $18.6 million, compared to $5.8 million at the end of the same period last year. As expected, the Company entered 1998 with limited bookings visibility, particularly in Japan.