SanDisk 2000 Annual Report Download - page 4

2 / 3 . Sa n D is k C o rp o r a t io n . 2 0 0 0 A n n u a l R e p o r t
A Letter from the President
F Y 2 0 0 0 – A B a n n e r Ye a r f o r S a n D is k .
F Y 2 0 0 1 – A C h a lle n g e a n d a n O p p o r t u n it y.
Fis c a l 2 0 0 0 w a s a ye a r o f p he no m e n a l g ro w t h
fo r Sa n D is k . D u rin g t h e y e a r w e s a w o u r
h a rd w o r k a n d in ve s t m e n t s o f t he p a s t s e ve r a l
ye a r s t r a n s la te in t o b o o m in g s a le s a n d g ro w in g
p r o fita b ilit y. This w as o u r s e v e nth c o ns e c ut iv e
ye a r o f r e v e n u e g r o w t h . The fin a n c ia l
p e r fo r m a nc e n u m b e r s a re o ut s ta n d in g ;
r e v e n u e s g re w t o $ 6 0 1.8 m illio n , u p 14 4 % fro m
19 9 9 . P r o d u c t r e v e nue s g r e w 15 6 % t o $ 5 2 6 .4
m illio n a n d p r o d u c t g r o s s m a r g ins inc r e a s e d 6 %
o v e r t h e p rio r ye a r, t o 3 2 % . To t a l u n it s s o ld in
fis c a l 2 0 0 0 e x c e e d e d 13 m illio n , c o m p a r e d t o
ju s t u n d e r 5 m illio n in t h e p rio r ye a r. Pr ic in g w a s
s t a b le fo r m o s t o f t h e y e a r, a n d w e e x p e rie n c e d
a re la t iv e ly m o d e r a te d e c lin e o f 2 2 % in t h e p r ic e
p e r m e g a b yt e s h ip p e d in 2 0 0 0 c o m p a re d to
19 9 9 . N e t inc o m e w a s $ 9 4 .7 m illio n , up 2 5 6 %
fr o m 19 9 9 , e x c lu d in g t h e o n e tim e a ft e r ta x
g a in o n t he UM C in ve s t m e n t o f $ 2 0 4 m illio n.
Lic e n s e a n d r o y a lt y r e v e n ue s g r e w 8 3 % t o
$ 7 5 .5 m illio n in fis c a l 2 0 0 0 , a n d w e r e c e iv e d a
s t ro n g b o o s t t o o u r p a t e n t p o rt fo lio fr o m t h e
s u c c e s s fu l s e t t le m e n t w it h L e x a r o f o u r ’ 9 8 7
p a t e nt in fr in g e m e n t c a s e . W e a ls o re n e w e d o u r
p a t e nt c r o s s lic e n s e w it h H ita c h i a nd s ig ne d a
p a t e nt c r o s s lic e n s e w it h TD K .
D u r in g t h e fir s t t hr e e c a le n d a r q u a r t e r s o f 2 0 0 0
w e w e r e u nd e r s e v e re p r o d u c t io n c a p a c ity
c o n s t r a in t s , r e s u lt ing in p ro d uc t a llo c a t io ns t o
o u r c us to m e r s a s t h e d ig it a l c o n s u m e r m a rk e t s
fo r o u r p r o d u c ts b e g a n t o g r o w a t a n
a c c e le r a t in g p a c e . O u r c h a lle ng e t h ro ug h o u t
m o s t o f t he ye a r w a s to r a m p u p o u r p ro d u c t io n
o u t p u t a s q u ic kly a s p o s s ib le . To a c h ie v e
t h e m a x im u m o u t p ut o f fla s h m e m o r y w e
a c c e le r a t e d o u r t e c h n o lo g y tr a n s it io n fr o m 12 8
m e g a b it .2 8 m ic ro n s in g le b it p e r c e ll fla s h
m e m o r y t o 2 5 6 m e g a b it D 2 c e ll fla s h , fir s t a t
.2 8 m ic ro n , t h e n a t .2 4 m ic r o n. B y t he fo u r th
q u a rt e r w e w e r e r un n in g t h e 2 5 6 m e g a b it D2
.2 4 m ic ro n d e s ig n a t th r e e U M C fa b s , u p fro m
o n e fa b in t he fir s t q u a r t e r. W e w e r e a ls o
r u n nin g t he m a jo r it y o f o u r c a r d a s s e m b ly a n d
t e s t a t o ur s ub c o n t ra c to r s in C h in a , Ta iw an a n d
t h e P h ilip p in e s . U n fo rt u n a t e ly, th e U S e c o n o m y
t o o k a s u d d e n tu r n fo r t h e w o r s e la t e in t he
ye a r, a nd w e e x ite d fis c a l 2 0 0 0 h a v in g t o d e a l
w it h a c o m p le t e ly d iffe r e n t s e t o f c h a lle n g e s fo r
fis c a l 2 0 0 1.
O u r v is io n is t h e s a m e a s it w a s o n th e firs t d a y
a t Sa n Dis k a lm o s t 13 y e a rs a g o . Th e p o s t P C e ra
p r e s e nt s u s e n o r m o u s o p p o r t u n it ie s fo r fla s h
m e m o r y s to r a g e w it h th e c o nve r g e n c e o f d ig it a l
c o n s u m e r e le c tr o n ic s , w ir e le s s c o m m u n ic a t io ns
d e v ic e s a nd In t e rn e t a p p lia n c e s . Th e ke y to
u n le a s hin g t he s e o p p o r t un it ie s is s up p ly in g
r e lia b le fla s h m e m o r y t h a t c a n b e m a n u fa c tu r e d
a t a n a ffo r d a b le c o s t w h ic h e na b le s n e w
m e g a - m a r k e t s , s u c h a s d ig it a l c a m e r a s a n d
w ir e le s s In t e r ne t a p p lia n c e s . Th e p a t h t o
a ffo r d a b ilit y is o u r p a s s io n a t e fo c u s o n r a p id
d e v e lo p m e nt o f le a d in g e d g e fla s h m e m o r y
t e c h no lo g y a nd c o n t ro lle rs . W it h o u r s t r a t e g ic
p a r tn e r To s h ib a a n d o u r a llie s in Ta iw a n , Sa n D is k
h a s a n e x tr e m e ly a g g r e s s ive r o a d m a p fo r t h e
d e v e lo p m e nt a n d fu tu r e m a s s p ro d u c t io n o f
a d v a n c e d fla s h m e m o r ie s a n d lo w - c o s t h ig h -
p e r fo r m a nc e c o nt r o lle r s . Fo r e x a m p le , Sa nD is k
a n d To s h ib a a r e c u rr e n t ly t he o n ly s up p lie rs
s h ip p in g m o n o lit h ic 5 12 m e g a b it fla s h c h ip s ,
m a n u fa c t u r e d fo r b o t h c o m p a n ie s a t To s h ib a ’s
Yo k k a ic h i w a fe r fa b in J a p a n . In m id 2 0 0 1 t h is
t e c h no lo g y is e x p e c te d to b e g in p r o d uc t io n a t
t h e Fla s hVis io n jo in t v e n t u re fa b in Vir g in ia .
J o in t d e ve lo p m e n t a c t iv it ie s a r e p r o c e e d in g o n
t r a c k t o in tr o d u c e h ig he r c a p a c it y a n d lo w e r
c o s t fla s h m e m o r y a n d c o n tr o lle r c h ip s in 2 0 0 2 .
In 2 0 0 1, w e a ls o e x p e c t o u r in v e s t m e n t s o f t h e
p a s t 18 m o n t h s in t he Se c u r e D ig it a l C a rd
s t a n d a r d t o b e g in to p a y o ff a s n u m e r o u s
p la tfo r m s s u p p o r tin g th e Se c u re Dig ita l C a r d
e n t e r t he m a r k e t . The r e a re c u r re nt ly 2 2 5
m e m b e r s in t h e SD A s s o c ia t io n a n d t h e p a c e