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Let's compare various companies in the flash memory business.

On 1/22, FLSH anounced earnings. They "met" analysts estimates, but revenues were light. The stock closed at 13 1/2 -2 1/8.

They discussed q1:

Mr. Moran continued, ``We recognize, of course, that the hi-tech industry is currently going through a period of uncertainty, as a consequence of which many customers are placing orders with shorter lead times and/or for smaller quantities at a time, thus reducing visibility in the near-term. While this may influence our results in the first quarter of 2001, we believe that the year 2001 overall will be another exciting year of growth for M-Systems. We have put together the infrastructure (people, technology, and organization) needed to progress toward our long-term goal of reaching the $1 billion revenue mark. In striving to achieve our long-term goals as soon as possible, we plan to continue to increase our investments in R&D and in sales and marketing channels in order to improve both our market position and our products' added-value to customers.'

On 1/25, SNDK announced earnings. The q4 numbers were okay, but they said that q1 would have sequentially lower revenues, by 15-20%. The stock closed at 31 1/8 -15 1/16.

On 2/2, SSTI anounced earnings. They "missed" the estimates and projected 1q revenues sequentially down 0-10%. The stock, already whacked in symapthy with SNDK, closed at 13 1/16 -1 1/2.

Is FLSH doing significantly better than the competition? I doubt it. I think their euphemistic "reduced visibility" means lower revenues. Why not just say it? They're still hoping new business will rescue them. More importantly, what expectations are built into the stock price? FLSH has fared no better than its competition through this earnings season, so probably the price already discounts reduced revenues on the order of SNDK's and SSTI's estimates.

So what are the prospects for the whole industry? If demand is siginificantly reduced, price competiton will significantly erode the big operating margins of the past few years. I still like the long term prospects for flash memory, but I expect some very tough times first. I truly believe in LTB&H, but I am long gone from this one.
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