McIntire Investment Institute

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Nasdaq SNDK

• McIntire Investment Institute

Chris Lueck
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SanDisk is a buy because ...

• It is the leading supplier of flash memory cards
• It has over 100 patents covering flash memory
  technology
• It will benefit immensely from the rapid growth
  of the flash memory market

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What does SanDisk do?
SanDisk designs, develops, and markets flash
memory storage products for use in a variety of
electronic systems.
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What is Flash Memory?
Flash memory is a nonvolatile form of memory used
to store data such as MP3s or pictures from
digital cameras. Nonvolatile means that the
data doesnt disappear when you turn off the
power or remove a card from a device.
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Product Overview

• CompactFlash
• MultiMediaCard
• Secure Digital (SD) Card
• PC Card
• IDE FlashDrive
• Personal Tag (P-Tag)
• Media Readers

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Competitors
Primary competitors include

• Sony
• Intel
• Toshiba
• Hitachi

Also, other data storage devices including
CD-RWs, DVD-RAM, Zip disks, and hard disks
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Risks

• Insufficient supply of silicon wafers
• Unfavorable rulings in current litigation -
  Mitsubishi suit, Lexar Media suit
• Loss of market share to competing manufacturers
• Glut in availability of Flash memory products

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Why Buy SanDisk?

• SanDisk is the flash memory market leader with
  28 share of the market
• Flash memory markets are on pace to grow 123 in
  2000, pushing worldwide revenues from 4.56B in
  1999 to 10.4B in 2000 (Web-Fleet Research, Inc)
• Between 2000 and 2005, flash memory revenues are
  expected to grow at an annual rate of 29.9, with
  revenues expected to total 37B by 2005
• Key partnerships with Toshiba and Tower
  Semiconductor formed to meet growing consumer
  demand for flash memory products

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Circuit City
Staples
Office Depot
Ritz Camera

CompactFlash, MultiMediaCards, and SmartMedia
cards made by SanDisk and Centon. Also, new
display for Memory Stick.
What products do they carry?
SanDisk CompactFlash and SmartMedia cards
SanDisk CompactFlash and SmartMedia cards
SanDisk SmartMedia cards
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Financials

• Q2 revenues were 143.9M, a 174 increase from Q2
  1999 and a 32 sequential increase from Q1 2000
• Gross profit margin of 41
• Product revenues account for 85 of total
  revenues, with license and royalty revenues
  accounting for the remainder
• CompactFlash represented 43 of products revenues
  and MultiMediaCards 22 of product revenues for
  Q2 2000
• Sales to the consumer market represented
  approximately 70 of product revenues and sales
  to the telecommunications/industrial market
  accounted for the remaining 30 during the three
  and six month periods ended June 30, 2000

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Financials Continued

• Market Cap 5.17B
• Return on Equity (last 12 months) 48.8
• Current Ratio 4.42
• Debt/Equity 0