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SanDisk: Film Bites the Dust

I think it is inevitable that traditional camera film will suffer the same fate as the typewriter and vinyl records. Of course, the future is digital photography.

A leading infrastructure company in this space is SanDisk Corporation . The company is the mastermind of Eli Harari, who founded SanDisk in 1988. He is a pioneer in the non-volatile memory industry, with a variety of patents to his name. He has a Ph.D. in solid state sciences from Princeton and has been with such companies as Honeywell, Intel and Hughes Aircraft Microelectronics.

Now, his company is the largest supplier of flash data storage products. In late 1995, the company went public. Currently, the market cap is $4.8 billion and there are about 800 employees.

The company has been the developer of key standards for flash memory cards. For example, the company introduced the first removable flash MultiMediaCard (its an ultra small size form factor card). In all, the company has more than 100 U.S. patents.

Okay, so what is flash memory? Well, it stores large amounts of information. And, the information does not disappear if the device is turned off. Yep, it is perfect for digital cameras. Actually, it is perfect for other types of multimedia devices, such as MP3 players, PDAs, and smart phones.

The company has been growing at fever pitch. In the past quarter, sales were $143.9 million, which was a 174% increase from the same period a year ago (the sequential growth rate was 32%). About $122.6 million of the revenues were from product sales and $21.4 from licensing fees. Net income was $24.3 million. In fact, the company has had profits every year since it went public.

True, there are risk factors. Competition will intensify. There are also component shortages.

However, the company has spent huge sums to deal with capacity constraints and is also continuing to innovate its product line. Besides, the marketplace is enormous for SanDisk. Keep in mind that the digital camera market is expected to be 6.5 million units this year and 40 million by 2004.