Microsoft Combinedppt Sansa E200 Combinedppt2
User Manual: Sansa e200
Open the PDF directly: View PDF 
.
Page Count: 94
| Download | |
| Open PDF In Browser | View PDF |
Nelson Chan EVP, Consumer Products Business and Corporate Marketing Agenda Global Market Share Opportunities Global Sales Expansion Key Market Segments and Product Strategies Branding and Advertising 2 February 23, 2006 Key Markets Million Units 600 500 400 300 200 CAGR 2005-08 Gaming w. slot or USB Digital Cameras USB Drives Flash Audio Players Phone Slots 62% 3% 24% 33% 68% 100 0 2004 2005 2006 2007 2008 Sources: Gaming - IDC Jan06 / SanDisk, Flash Audio - Gartner Feb06 , DSCs - IDC Aug05/Feb06, UFDs - Gartner Feb06, Phone Slots - Strategy Analytics Feb06 3 February 23, 2006 Growing Market Share: Leader in U.S. Retail Revenue Shares – Cards & UFDs SanDisk 50% Lexar 45% PNY 40% Sony 35% 30% 25% Kodak 20% Fujifilm 15% Kingston Memorex 10% 5% 20 05 -0 1 20 05 -0 2 20 05 -0 3 20 05 -0 4 20 05 -0 5 20 05 -0 6 20 05 -0 7 20 05 -0 8 20 05 -0 9 20 05 -1 0 20 05 -1 1 20 05 -1 2 0% 4 February 23, 2006 Source: NPD Group Europe: Opportunity for Growth in 2006 Retail Revenue Shares – Cards + UFDs SANDISK 25% PNY TECH TRADEBRAND 20% SONY FUJIFILM 15% HAMA LEXAR 10% OLYMPUS DANE ELEC 5% KINGSTON UNBRANDED 5 February 23, 2006 Source: GfK (France, Germany, UK) -1 2 20 05 -1 1 20 05 -1 0 20 05 20 05 -0 9 -0 8 20 05 -0 7 20 05 -0 6 20 05 -0 5 20 05 -0 4 20 05 -0 3 20 05 -0 2 20 05 20 05 -0 1 0% APAC: Opportunity for Growth in 2006 All Formats per Brand − Revenue SANDISK 30% SONY KINGSTON 25% TOSHIBA OLYMPUS ADATA 20% FUJIFILM TRANSCEND 15% LG AIGO 10% 5% 6 February 23, 2006 Source: GfK (China, Korea, Hong Kong, Taiwan, Singapore) -1 2 20 05 20 05 -1 1 -1 0 20 05 -0 9 20 05 -0 8 20 05 -0 7 20 05 -0 6 20 05 -0 5 20 05 -0 4 20 05 -0 3 20 05 -0 2 20 05 20 05 -0 1 0% Japan: Opportunity to Lead In Highly Fragmented Market All Formats per Brand − Shipments 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% SanDisk Buffalo Hagiwara Panasonic I-O Data Lexar Source: TSR 7 February 23, 2006 4 Q 3 Q 2 Q 1 20 05 Q 4 Q 3 Q 2 Q 20 04 Q 1 Sony Flash Digital Audio Players: US Market Shares Unit Share c05 v05 No O ct0 5 Samsung iRiver -0 5 Se p g05 5 Au l-0 Ju -0 n05 5 Ju ay Ja De No ct0 O Se l- 0 Ju -0 ay Ju 5 M r-0 Ap ar -0 05 M b- Fe Au Source: NPD Group 5 0 SanDisk Creative Labs M 0 -0 10 Ap r 10 -0 20 n05 20 c05 30 v05 30 5 40 p05 40 g05 50 5 50 n05 60 5 60 5 70 n05 70 5 90 80 February 23, 2006 Apple Sony ar Creative Labs 05 iRiver M Sony b- Samsung 80 Ja 8 SanDisk Fe 90 Apple De Revenue Share Retail Sales and Marketing Strategy 1 Be Everywhere where people will purchase …with the broadest product offering 2 Own the Store – “Store in Store” Segment, Differentiate, Promote, Train, Merchandise 3 9 February 23, 2006 Build the Brand – Predispose the Customer to choose SanDisk Worldwide Sales Structure: Aggressive Expansion Outside the US HQ – Sunnyvale Retail/OEM Direct/ Distribution CE/Mobile Photo Food/Drug US Canada Mexico 10 Dublin Retail/OEM Retail/OEM CE/Mobile/ Photo Germany UK, France Nordic S Europe E Europe Middle East Africa Sales Ops Field Eng Sales Ops Yokohama CE/Mobile/ Photo Hong Kong Retail/OEM CE/Mobile China Taiwan Korea S Asia India Doubling direct sales in EMEA and APAC (with focus on China) Added new sales team in Australia Regional marketing staff in EMEA, APAC and Japan February 23, 2006 Sales Ops Field Eng Sydney Retail CE/Mobile/ Photo Australia New Zealand Global Reach: Over 150,000 Storefronts Worldwide USA, Mexico & USA, Mexico & So. America So. America 51,000+ 51,000+ AAFES Best Buy Brooks/Eckerd Circuit City CompUSA Wal-Mart Costco K-Mart Musicland Office Depot Staples Sears Rite Aid Radio Shack Meijer/Food Safeway Kroger HEB MDI GameStop Sprint Verizon 11 February 23, 2006 Canada Canada 5,000+ 5,000+ Bell World Best Buy Blacks Costco London Drugs Radio Shack Sears Shoppers Drug Mart West Fair Canada Tire T Mobile Carphone Warehouse Woolworths Dixons Orange Wal-Mart Camara Euronix FotoSistema Fotoco FNAC Foto Service Germanos Internet shops Knut Leclerc MakroMarkt PhotoStation Pulsat RIC Ringfoto Schlecker Europe Europe 51,000+ 51,000+ Asia/ Asia/ Pac Rim Pac Rim 27,000+ 27,000+ Best Coles Fortress Broadway Lotte Costco Sunfar GoMe SuNing DahZong Officeworks Big W Harris Tech. Good Guys H Norman Woolworths 48,000 store fronts added in 2005! Japan Japan 14,000+ 14,000+ Aeon BIC Best Edion K’s Kitamura Kojima Lawsons Matsukiyo Yamada Yodobashi 20,000+ 20,000+ Food Food&&Drug DrugStores Stores 30,000+ 30,000+ Mobile MobileStores Stores World Class Customers 12 February 23, 2006 Differentiated and Segmented Strategy Core Digital Imaging Emerging High Growth Personal Data Storage Digital Audio Mobile Phones Gaming Best Cruzer® Titanium II SanDisk Extreme® Family SansaTMe200 Memory Stick PRO Duo™ Memory Stick PRO Duo™ Better SanDisk Ultra® Family Cruzer® Micro II SansaTM c100 miniSD™ MMCmobile™ Good Blue Family Cruzer® Micro Skins SansaTM m200 SD™ microSD™ iNAND™ Cruzer Crossfire™ Shoot & Store™ Family 13 February 23, 2006 Cruzer® Mini Sansa® e100 Digital Still Camera Market: Growing Installed Base DSC Shipments & Installed Base Installed Base 4 Years shipments 250 Life Span 4 Years 200 150 100 50 2004 2005 2006 2007 Source: DSCs-IDC Aug ’05/Feb ‘06, Installed Base-SanDisk Estimates 14 February 23, 2006 2008 Card Capacities Increasing Digital Camera Market Cards for DSCs Units M Units 250 NAND Units for DSCs Average Capacities Cards for DSCs $ TAM MB M$ 4,500 DSC NAND $ TAM 2,000 4,000 200 3,500 1,500 3,000 150 2,500 2,000 100 1,000 1,500 1,000 50 500 500 0 0 2004 15 February 23, 2006 2005 2006 2007 2008 Source: Web-Feet Research, Feb ‘06 0 2004 2005 2006 2007 2008 Digital Imaging Segments Mainstream Value-Conscious Professional Prosumer 16 February 23, 2006 USB Flash Drive Market USB Drive Market Average Capacities M Units 180 M$ 3,500 160 UFD Units 140 UFD $ TAM 3,000 2,500 120 2,000 100 2,000 1,500 80 1,500 1,000 60 1,000 40 500 20 0 0 2004 2005 2006 Source: Gartner Feb ‘06 17 MB 2,500 February 23, 2006 2007 2008 500 0 2004 2005 2006 2007 2008 USB Flash Drive Products New Product New Product 18 February 23, 2006 U3TM – Transforming the USB Market Transform USB Drives from Today’s ‘Floppy Drive Replacement’ into a Portable Personal Workspace Enable a Continuum of Online and Offline Activity Participate in the Shift from The PC-Centric Paradigm to Access of Data “Anytime, Anywhere” Home 19 February 23, 2006 Office Friend’s House Business Center Internet Cafe U3 Fuels Demand for Flash Increases Average Drive Capacity Usage Expands the Market Through New Uses Meets Individual Needs Through Software Personalization 20 February 23, 2006 Growing the Market and Increasing Differentiation: Protection Against Online Fraud Ideal for Many Online Applications (Banking, Trading, E-Commerce, etc.) Uses Highly Secure, Dual-Factor Authentication Partnering with the Security Industry’s Leaders RSA & Verisign Password Password + Crypto-Secret Request Authentication Username Password Authenticate Crypto-Secret 21 February 23, 2006 Growing the Market and Increasing Differentiation: Protection for the Enterprise SanDisk is Partnering with Key Companies to Provide Highly Secure Enterprise Solutions Goal − Ensure Sensitive Data Doesn’t “Walk Out the Door” via an Unsecured USB Drive Working to Create the Right Solutions PLUS Provide Methods for Managing Fleets of Devices Authorized UFD Remote Device Administration Personal UFD IT Manager 22 February 23, 2006 Gaming Card Market Gaming Card Market Average Capacities M Units M$ 1,200 80 70 Gaming Card Units 1,000 MB 1,000 800 60 50 800 Gaming Card $ 40 600 30 400 400 20 200 10 0 0 2004 23 600 February 23, 2006 2005 2006 2007 2008 Source: Web-Feet May ‘05 200 0 2004 2005 2006 2007 2008 New Gaming Consoles All Major New In-Home Consoles are USB/Card Enabled Content import, downloads and game saves are primary drivers Sony® PS3™ CF, SD, and MS slot 6 USB ports Microsoft® Xbox 360™ Proprietary memory unit with USB interface 3 USB ports Nintendo® Revolution SD slot 2 USB ports 24 February 23, 2006 Gaming – Incremental Store Fronts and Shelf Space New Products 25 February 23, 2006 Gaming In Retail 26 February 23, 2006 Flash-Based Digital Audio Players Billions $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 27 February 23, 2006 IDC Sept 2005 Gartner Feb 2006 2004 2005 2006 2007 2008 Flash Audio Player Strategy Significant Cost Advantage Due to Vertical Integration Leverage Established Global Retail Sales Channels Rapid global expansion – Europe and Asia Develop “Cool” Products at Very Attractive Price Points “Good, Better, Best” product portfolio Cards slots for expandability and portability Own the Market Sweet Spot: $49-$149 Allow Customer Choice Support of Microsoft PlaysForSure DRM (RealNetworks, Napster and Yahoo Music) 28 February 23, 2006 TM Strong Channel Presence “Own the store” − Educate, Promote and Merchandise Promote Media Centers and “Store Within a Store” Concepts “Dramatically Increase In-Store Adjacencies” 29 February 23, 2006 Building the Brand Increase Sales in Established and New Markets ~2% of revenues for branding and merchandising Building Global Brand Awareness Engaging Grey San Francisco for global advertising and MetaDesign for brand identity communication Predispose Consumers to Buy SanDisk Premium brand at everyday price 30 February 23, 2006 Marketing Objectives Drive the Brand Globally Focus on high growth geographies (EMEA, China, etc.) Focus Global Marketing Campaigns on Key Areas SanDisk brand and products Digital audio Mobile (handsets) High-performance card line (digital imaging) Promote Usage of Flash Cards in Mobile Phones and Drive Retail Attach Rates Establish SanDisk Brand in Digital Audio and Solidify #2 Position 31 February 23, 2006 Summary Focusing on Multiple High-Growth Markets Unrivaled Product Lines Both breadth and depth Highly segmented and differentiated Strong new product pipeline and innovation Drive Global Expansion and Market Share Gain Exceptional Channel Strength and Coverage Leveraging Key OEM and Retail Partnerships Slots Æ Bundles Æ Aftermarket Investing to Build a Global Consumer Brand 33 February 23, 2006 Yoram Cedar EVP of Handset Business and Corporate Engineering Worldwide Mobile Phone Card TAM 1,200 $9,000 $8,000 Mobile Flash Card 1,000 Revenue, $K $7,000 Million Units 800 $6,000 $5,000 600 $4,000 400 $3,000 $2,000 200 $1,000 - $0 2004 2005 Total Mobile Phones (000)'s Units 35 February 23, 2006 2006 2007 2008 Mobile Phone Card Slots (000)'s Units Sources: Phones - Strategy Analytics, Mobile Revenue - SanDisk, 2006 Total Mobile Card Revenue, $K Primary Mobile Card Usages Memory Expansion Digital audio Personal images and video recording Personal data backup Variety of files (email, presentations…) Protected Content Storage Pre-loaded Downloaded Mobile User Authentication (Dual Factor Authentication) Securely access the enterprise, banking and other sensitive services 36 February 23, 2006 Applications Are Storage Intensive Content will follow successful CE Applications Mobile Market MobileTV GPS Phone Game Phone Video Phone Music Phone PC, CE Markets PDA Phone 37 Email February 23, 2006 Camera Phone Imaging Music Video Game Map TV / STB Application Worldwide Mobile Card Usage 2005 Retail Others 13% Picture 26% 38 February 23, 2006 Music 61% Source: SanDisk, 2006 Applications Drive Retail Card Capacity 2500 Others (Games, Maps, …) 2000 Video Clip (Sports, MusicTV, Comedy, Films) 1500 Digital Music 1000 Personal Picture 500 0 Personal Video 2005 2008 Digital Rights Management (DRM) Solutions Expected to Accelerate Consumption 39 February 23, 2006 Source: Usage from SanDisk Estimates, Q1’06 Evangelize to Grow Mobile TAM Leverage Relationships with Mobile Phone Ecosystem Provide Leading Technical Expertise for Rapid Adoption and Time-to-Market Drive Content Security Solutions Support OEM Æ Support Retail 40 February 23, 2006 Mobile Phone Ecosystem Partnership to Drive Market Adoption ASSP, OS 41 February 23, 2006 Security Content and Service Providers Mobile Operators Handset Vendors microSD Adoption Accelerating Flash Card Adoption in Handsets 450 400 Number of Models 350 300 microSD 250 miniSD SD 200 All Others 150 100 50 0 Q304 Q404 Q105 Q205 Q305 Q405 Source: SanDisk, 2006 42 February 23, 2006 Overwhelming Adoption of SDTM Formats 43 February 23, 2006 Source: SanDisk, 2006 Manufacturer 2005 Nokia RSMMC, miniSD, microSD Motorola SD, miniSD, microSD Samsung RSMMC,SD, miniSD, microSD Siemens/BenQ RSMMC, SD, microSD LG miniSD, microSD SEMC MS Pro Duo PMC miniSD Alcatel miniSD NEC miniSD, microSD Kyocera miniSD, microSD Sharp SD, miniSD Sagem miniSD, microSD Philips SD Mitsubishi MS Duo, miniSD Sanyo miniSD SD format adopter OEM Business Customers and Strategy for Growth Added Value and Functionality Customization Security and DRM Collaboration on Future Designs Design know-how Custom solutions All Relevant Form Factors Embedded Solutions as Needed Retail Strength 44 February 23, 2006 Retail Business Most Comprehensive Mobile Card Line Up Partner with Retailers and Market Drivers to Increase Adoption Rates In-Store education Joint promotion Customized content (e.g., Verizon VCast) 35k Storefronts and Growing Broad Product Offering All major form factors 45 February 23, 2006 Poised for Mobile Growth Huge Addressable Market Projected $7B TAM in 2008 Technology and Product Leadership Pioneer of mobile cards Right solutions to satisfy and grow market Channel Strength Right customers; Right channels 46 February 23, 2006 New Technologies for Emerging Markets Third Generation Flash Cards TrustedFlashTM Technology Accelerating Consumption of Storage/Capacity 9 Card-Based Content Protection and Digital Rights Management (DRM) Solution 9 State-of-Art Security Architecture 48 February 23, 2006 Content Goes Mobile TrustedFlash Technology Mobile Content TAM Projected for 2007 Music – $ 9B Games – $ 5B Video – $ 10B Source: Arc Group, IDC, iSuppli, Strategy Analytics, Gartner 49 February 23, 2006 Portability Ease of Use Flexibility Increased Security Mobile User Authentication (Dual-Factor Authentication) TrustedFlash Technology Mobile Enterprise Authenticate employees to provide VPN access Credentials are stored in card tamper-resistant area No key fob required Mobile and PC Banking Authenticate users to banks for secure access through PC and mobile On-Line Users:* 2005 2010 No dedicated token required 270M 1B e-Commerce Authenticate buyers to merchants for both mobile and PC e-commerce 50 February 23, 2006 * Source: Diversinet, 2005 TrustedFlash Value Proposition Consumer: Can Own Content and Play on Multiple Devices Content Owner/Distributor: Content Safely Stored on Card MNO: Consumers can Seamlessly Upgrade Handsets Handset Manufacturer: No Need to Design-in Costly Security and Tamper Resistance – Zero Liability for Content Protection 51 February 23, 2006 TM TrustedFlash Technology in a Card TM Demonstrating power of TrustedFlash technology CTIA Innovative Product 2005 CES Innovations 2006 Disney’s Best of CES 2006 52 February 23, 2006 Education TrustedFlash Technology 54 million K-12 Students in the US 17 Million College Students Need for Simple, Portable Distribution of Textbooks and Classroom Materials Positive Feedback from Several Beta Sites Evaluating Cruzer Freedom 53 February 23, 2006 Judy Bruner EVP and CFO Agenda Financial Review Modeling our Future Success Revenue drivers Fab capacity and investments Gross margin factors Target Financial Model 56 February 23, 2006 Revenue Growth -----$2.3B----License/ Royalty ----$1.78B---Product ----$1.08B---- ----$541M---- 57 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2002 2003 2004 2005 February 23, 2006 IP Leadership: License and Royalty Revenue -----$239M----$ in Millions -----$174M---------$97M--------$48M------ 58 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2002 2003 2004 2005 February 23, 2006 Consistent Gross Margins 50% 45% 40% 44% 41% 38% 35% 30% 34% 40% 35% 42% 40% 36% 32% 32% 42% 41% 35% 36% 37% 44% 40% 37% 34% 32% 37% 34% 29% 25% 20% 15% Total GM% 10% Product GM% 5% 59 February 23, 2006 40 5 Q 30 5 Q 20 5 Q 10 5 Q 40 4 Q 30 4 Q 20 4 Q 10 4 Q 40 3 Q 30 3 Q 20 3 Q Q 10 3 0% Excellent Gross Margin in 2005 Reflects 90nm Cost Structure & Effective Fab 3 Transition 45% 40% 35% 38.6% 34.9% 34.7% 30% 25% 42.2% 40.6% 35.5% 31.9% 28.5% 20% 15% 10% 5% 0% 2002 2003 Total GM% 60 February 23, 2006 2004 2005 Product GM% 2005 Record Operating Income and Margin 13 Consecutive Quarters 20%+ $ in Millions % of Revenue $700 $600 24% 24% 25% $577 $500 28% 23% 18% $400 $419 13% $300 $200 8% $257 3% $100 $0 61 February 23, 2006 -2% 2003 2004 2005 EPS $2.00, Up 39% Y/Y $ per Share $2.00 $2.00 $1.44 $1.02 $1.00 $0.00 62 February 23, 2006 2003 2004 2005 Strong Balance Sheet Cash & Short-term investments Accounts Receivable (DSO = 44) Inventory (Turns = 5.4) Other current assets Total Current Assets PP&E Note Receivable, FlashVision Investment in FlashVision Investment in Flash Partners Other non-current assets Total Assets Current Liabilities Non-current Liabilities Total Liabilities Stockholders' Equity Total Liabilities & Stockholders' Equity Operating Lease Guarantees - Fabs 63 February 23, 2006 January 1, 2006 $ millions 1,698 329 332 217 2,576 211 62 161 42 68 3,120 571 25 596 2,524 3,120 278 Cash up $375M Y/Y Focus area for reduced cycle time & increased flexibility Significant Cash Flow From Operations $ Millions $600 $481 $500 $400 $300 $273 $228 $200 $100 $0 64 February 23, 2006 2003 2004 2005 Revenue per Employee Increasing Productivity 1200 1083 3 1000 876 $2.4M 599 $2.2M 1.5 $1.6M 400 1 200 0.5 0 0 2002 2003 Ending headcount 65 February 23, 2006 2 2004 2005 Revenue $ per Employee $ millions Headcount 2.5 751 800 600 3.5 Modeling our Future Success Revenue Drivers Markets Elasticity TB growth and pricing Fab Capacity and Investment Gross Margin Factors 66 February 23, 2006 Revenue Base Diversifying End Markets as a % of Revenue 2003 Imaging 75% USB 3% Mobile Handset 4% Digital Audio Gaming Other Products 9% License and Royalty 9% 67 February 23, 2006 2004 65% 13% 6% 1% 5% 10% 2005 52% 12% 13% 6% 3% 4% 10% Portfolio of Markets at Different Stages Terabyte Growth by End Market 2003 2004 2005 Imaging 226% 130% 119% USB 1178% 909% 142% Mobile Handset Year 1 316% 916% Year 1 791% Digital Audio Gaming 68 Year 1 Industrial/Other 146% 24% -16% Total 238% 167% 166% February 23, 2006 Strong Elasticity Retail Capacity vs. Price per MB % Quarterly Change Average Retail Capacity per Card 40% 30% 20% +8% 10% 0% (10%) (20%) -13% Price per MB (30%) (40%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2002 Retail Channel Only 69 February 23, 2006 2003 2004 2005 Elasticity Capacity & Unit Growth Æ MB’s Sold % Quarterly Change Seasonality also a factor 120% 100% 80% Megabytes Sold 60% 40% 20% 0% Price per MB (20%) (40%) Q1 Q2 Q3 2002 All Channels 70 February 23, 2006 Q4 Q1 Q2 Q3 2003 Q4 Q1 Q2 Q3 2004 Q4 Q1 Q2 Q3 2005 Q4 TB Growth Forecasted to Accelerate in 2006 Fueled by Fab 3 Supply, Market Demand Terabytes Sold ASP per MB ASP per MB Terabytes Sold +180-190% +166% +167% 2001 71 February 23, 2006 +233% +238% 2002 2003 2004 2005 2006 Revenue Growth Forecast Actual 2002 - 2005 CAGR Actual 2005 Growth Projected 2005 - 2008 CAGR What we said last year for 2004 - 2007 CAGR Terabyte Growth 189% 166% 130 - 170% 100 - 150% ASP per MB Decline 44% 52% 40 - 50% 35 - 45% Total SNDK Revenue Growth * 62% 30% 25 - 40% 25 - 35% * Projected Revenue CAGR includes NAND Products, License & Royalty and 3D Products 72 February 23, 2006 More on Revenue Growth Nand Products Revenue 2005 $2067M 3D Products * License & Royalty $239M Total $2306M Revenue 2006 MB +180-190% ASP/MB -(50-55%) Revenue CAGR ~ 25% - 40% 2005 - 2008 $60 - 90M ~ 50% - 75% 2006 - 2008 ~$350M ~ 30% - 40% 2005 - 2008 ~ 25% - 40% 2005 - 2008 * 2005 3D Revenue not included in SNDK 73 February 23, 2006 Planning for Fab Capacity and Capital Investment TB Growth CAGR 2005 - 2008 130% Fab “4” needed 1st H 2009 150% Fab “4” needed 2nd H 2008 170% Fab “4” needed 1st H 2008 All Scenarios Assume 70% Captive/30% Non-captive Model 74 February 23, 2006 2005 SanDisk Fab Investment Significant Funding from FP Working Capital ($ in millions) Capital Investment Flash Partners FlashVision SNDK owned Equipment at FlashVision Total Capital Investment Payment SNDK Cash FP/FV Working Capital Operating Leases - Flash Partners Impact on SNDK Balance Sheet Investment & Notes Receivable - Flash Partners Investment & Notes Receivable - FlashVision Capital Equipment End of Year Operating Lease Guarantee Flash Partners FlashVision Total Operating Lease Guarantee 75 February 23, 2006 Analyst Day Last Year Actual 2005 Forecast 2005 519 90 39 648 470 80 50 600 95 328 225 648 360 240 600 22 34 39 95 230 80 50 360 203 75 278 Fab 3 Investment 2006 Investment Reflects Accelerated Ramp ($ in millions) Gross SNDK Capital Investment Less: Flash Partners Working Capital Net SNDK Investment Source of Funding - Net Investment SNDK Cash Investment in FP Operating Leases/Other Financing Source of Funding - Total Investment Funding by SNDK Cash or FP Working Capital Funding by Leases or Other Financing Total SNDK Capital Investment Actual 2004 23 0 23 Cumulative Last Years' Forecast Forecast Actual Committed thru thru 2005 2006 2006 2006 519 1,200 1,742 (1) 1,253 (272) (200) (472) (2) (100) 247 1,000 1,270 1,153 23 0 23 22 225 247 Forecast 500 500 1,000 23 0 23 294 225 519 700 500 1,200 545 725 1,270 1,017 725 1,742 563 590 1,153 58% 42% (1) Capital Investment by SNDK up from last year's forecast due to acceleration of Fab 3 expansion to 70,000 wafers/month (SNDK's share 50%) expected by March 2007, up from 48,750 w/m (2) Flash Partners working capital contributions greater than previously forecasted This is SanDisk's share of FP working capital 76 February 23, 2006 663 590 1,253 53% 47% Potential Future Fab & Capex Investment Assumes Fab 3 at capacity of 100K w/m by end of 2007 ($ in millions) Capital Investments FlashVision Investment Fab 3 Investment Potential Fab "4" Investment Total Gross SNDK Fab Venture Investment Actual 2004 33 23 Actual 2005 91 519 Forecast 2006 1,200 56 610 SNDK owned fab equipment- FV Non-Fab Capex Investment Total SNDK Capex Investments 63 63 126 39 95 134 200 200 300 300 500 500 102 1,158 1,260 Total SNDK Capital Investments (Fab & Capex) 182 744 1,400 1,800 2,400 6,526 200 150 350 450 1,328 375 182 0 328 225 191 0 1,050 1,450 1,950 4,823 Funding Fab Ventures Working Capital Committed Operating Leases * SanDisk Cash spent Remaining Funding Required * Committed Operating Leases = SanDisk's 50% share of 85B Yen 77 February 23, 2006 1,200 Potential 2007 2008 5 YrTotal 124 1,100 700 3,542 400 1,200 1,600 1,500 1,900 5,266 Fab and Capex Financing Strategy Potential Expansion Suggests Funding Requirement of Approximately $4.8B for 2006-2008 Strategy Remains 50% Cash and 50% Other Financing 50% Cash Funding Cash flow from operations a significant source Maintain minimum cash balance of $1B 50% Other Financing Diversification of funding sources & maturities Operating lease financing remains high priority − attractive cost of capital 78 February 23, 2006 Fab 3 ROI Return = Gross Margin Delta of Captive vs. Non-captive, After Tax Investment = Capital Provided to Flash Partners Projections Analyzed Through 2010 Pricing Assumed to Follow Forecasted Cost Reduction No Industry Downturn Factored In ROI 0% operating leases 25% operating leases 50% operating leases 79 February 23, 2006 ~35% ROI ~50% ROI ~90% ROI -5% 80 February 23, 2006 A R M S TM ic ro R am bu s A M D In te l X ili nx Le xa r 65% K od ak M ic ro n In fin eo n C S yp ili co re ss n S to ra ge -15% TI N V ID IA S an D is Q k ua lC om M m -S ys te m s M ot or ol B a ro ad co m ROIC SanDisk Producing Strong ROIC ROIC Last Four Quarters 55% 45% 35% 25% 15% 5% Key Gross Margin Drivers Technology Transitions 300mm vs. 200mm Wafer Mix Captive vs. Non-Captive Mix Fab Start-up Costs & Fab Ramp-Up Non-memory Cost Reduction Average Capacity of Card Sales Product Line Mix ASP/MB converging for leading form factors Flash memory as % of BOM MP3 devices – lower margin %, higher margin $ 81 February 23, 2006 Captive & Non-Captive Gross Margins 82 Captive Gross Margin 2003 ~40% 2004 ~42% 2005 ~45% Non-Captive Gross Margin ~19% ~13% ~18% Non-Captive Mix 26% 35% 35% License/Royalty GM Contribution 6% 7% 7% Total Gross Margin 41% 39% 42% February 23, 2006 Planning for Strong Growth Revenue $ in billions 7 6 5 4 25% CAGR 3 40% CAGR 2 1 0 2002 2003 2004 2005 2006 2007 No Industry Downturn Assumed 83 February 23, 2006 2008 Scaling the Infrastructure Requires Targeted Investments Investing in Systems Application upgrades/replacements Automation of manual processes Network speed, redundancy, security Organization Raising the bar International Design centers, fab operations, local sales support Process Re-engineering & Cycle Time Reduction Supply chain – assembly & test Customer fulfillment Etc. 84 February 23, 2006 Target Financial Model – Non-GAAP Non-GAAP Annual Target Model 2006 - 2008 Non-GAAP Annual Guidance 2006 Last Years' Target Model 2005 - 2007 2004 $1,777M 2005 $2,306M 65% 30% 25 - 40% CAGR Total Gross Margin 38.6% 42.2% 35 - 42% R&D 7.0% 8.4% 7 - 9% 7 - 9% S&M 5.1% 5.3% 5 - 6% 5 - 6% G&A 2.9% 3.4% 3 - 4% 3% Oper Expenses 15.0% 17.2% 15 - 18% 17 - 18% 15 - 18% Oper Income 23.6% 25.0% 20 - 24% 22 - 24% 20 - 24% 37% 37% Revenue Revenue Growth Tax Rate 25 - 35% CAGR 39 - 42% 35 - 40% 35% Non-GAAP excludes: stock compensation and acquisition related charges for in-process R&D and amortization of intangibles Reconciliation to ‘GAAP Target Model for 2006-2008’ and ‘GAAP Guidance for 2006’ included in Appendix 85 February 23, 2006 Stock Compensation Strategy (in millions) Shares Outstanding Incentives Issued 2005 - gross Incentives Issued 2005 - net Stock Incentives Outstanding End of 2005 188.2 6.5 5.7 20.4 % of Shares Outstanding 3.4% 3.0% 11% 2006 Reduced size of new hire and annual grants; believe market is doing the same Given significant growth in new hires, including Matrix, expect incentive issuance to remain at approximately 3-3.5% See Appendix for estimated impact on GAAP results 86 February 23, 2006 Growth & Profitability Last Four Quarters 50% QCOM 40% INTC ALTR Operating Margin 30% SNDK XLNX TXN RMBS 20% BRCM ARM NVDA 10% FLSH -20% -10% 0% IFX STM EK 0% MU 10% AMD 20% 30% CY -10% SSTI -20% Y-o-Y Revenue Growth 87 February 23, 2006 40% 50% 60% Summary Attractive and Consistent Business Model Fab Investments Providing Strong Returns Planning for Projected Growth Diversifying revenue base Diversification of funding sources Scaling the infrastructure 88 February 23, 2006 Appendix GAAP Financial Guidance − 2006 Non-GAAP 2006 Adjustments (1) Total Gross Margin 39% - 42% 1% Operating Expenses 17% - 18% $145 - $175 Operating Margin 22% - 24% 5% - 7% Tax Rate (1) 35% GAAP 38% - 41% (2) (3) 21% - 24% 15% - 19% >35% (4) Estimate of stock compensation & acquisition related intangible amortization to be included in cost of sales (2) Includes stock compensation of approximately $100 million, in-process research and development of $30 to $50 million related to the Matrix acquisition and amortizaton of acquisition related intangibles of $15 - 25 million (3) Reflects estimate of impact on operating margin of stock compensation, in-process R&D and amortization of acquisition related intangibles expected in cost of sales and operating expenses (4) 90 Effective GAAP tax rate will reflect the non-deductibility of in-process R&D and incentive stock option expense February 23, 2006 GAAP Target Model Annual Target Model 2006 - 2008 Non-GAAP Adjustments GAAP (1) Total Gross Margin 35% - 42% 1% Operating Expenses 15% - 18% 4% - 6% Operating Margin 20% - 24% 5% - 7% (2) (3) 34% - 41% 19% - 24% 13% - 19% (1) Estimate of stock compensation & acquisition related intangible amortization to be included in cost of sales (2) Includes stock compensation, acquisition related in-process research and development, and amortizaton of acquisition related intangibles (3) Reflects estimate of impact on operating margin of stock compensation, in-process R&D and amortization of acquisition related intangibles expected in cost of sales and operating expenses 91 February 23, 2006 Q&A 3-5 Year Outlook Flash Markets Expected to Grow 3X-4X (>$30B). In Five Years, Primarily Handsets and CE Investing to Meet Market Challenges and Growth Opportunities to Become Consumer Branded Powerhouse in Next Five Years Uniquely Positioned to Meet Competition Challenges and Capitalize on Massive Global Consumerism in Coming Decade Creating Shareholder Value 93 February 23, 2006 SanDisk, the SanDisk logo, Store Your World in Ours, Cruzer, SanDisk Extreme and SanDisk Ultra are trademarks of SanDisk Corporation, registered in the United States and other countries. Cruzer Crossfire, gruvi, the gruvi logo, Sansa, and Shoot & Store are trademarks of SanDisk Corporation. SanDisk Corporation is an authorized licensee of SD. The PlaysForSure logo is a trademark or registered trademark of Microsoft Corporation in the United States and/or other countries. Memory Stick PRO Duo is a trademark of Sony Corporation. PSP and PlayStation are registered trademarks or trademarks of Sony Computer Entertainment, Inc. (SCEI). Skype and the Skype logo are trademarks of Skype Technologies S.A. U3 and the U3 smart logo are trademarks of U3, LLC. Other brand names mentioned herein are for identification purposes only and may be trademarks of their respective holder(s). © 2006 SanDisk Corporation. All rights reserved.
Source Exif Data:
File Type : PDF File Type Extension : pdf MIME Type : application/pdf PDF Version : 1.3 Linearized : Yes Create Date : 2006:02:23 13:09:08-08:00 Modify Date : 2006:02:23 13:09:08-08:00 Page Count : 94 Creation Date : 2006:02:23 21:09:08Z Mod Date : 2006:02:23 21:09:08Z Producer : Acrobat Distiller 5.0.5 (Windows) Author : leonella.mori Metadata Date : 2006:02:23 21:09:08Z Creator : leonella.mori Title : Microsoft PowerPoint - CombinedpptEXIF Metadata provided by EXIF.tools