I think you are missing a solid $40 MM in licensing revenues for SNDK next year, coming to about $.40/share. My guess, which is conservative, IMTO, is that royalties are going to be at least $160 MM in 2004. I also do not agree with the rest of your analysis, while the first quarter might be a little under the quarter just passed, unless we get a recession this year, sales are going to continue and increase, and while pricing pressures might be present, these (together with technology improvements that bring costs down, sometime faster than pricing, at least for 2004, when supply should still be tight) will not get margins to drop all the way to 30% in the second half. Actually, I think that using 34% margins for the first two quarters and 32% for the last two is more rational. Over the weekend, I'll try and come up with my forecast, but my back of the envelope calculations are for at least $2.80 for the coming year and more likely just north of $3. That is a growth of 20% minimum and thus fully justify a PE of between 25 and 33 (depending on the PE given to the like of INTC etc...) leaving me with my original target of $95. I am not sure why the market acted as it has, I think they do not understand the power of license revenues which are going to grow more the more competition SNDK gets....(mind you, my high end yearly royalties is $206 MM for 2004 which contribute by itself just about $1.30/share to earnings and my total high end earnings is closer to $3.25.).
