Bloomberg News

SanDisk Tumbles as Lower Prices Hurt Sales: San Francisco Mover

January 27, 2012

Jan. 26 (Bloomberg) -- SanDisk Corp. dropped the most in two years after the biggest maker of flash-memory cards gave a sales forecast that fell short of estimates, citing lower prices for chips that store data in mobile phones.

SanDisk dropped 11 percent to $46.39 at the close in New York, for the biggest decline since Jan. 29, 2010. The stock slipped 1.3 percent last year.

The company said it’s putting the expansion of a plant on hold as prices fall for so-called Nand flash-memory chips, used to store information in portable devices such as Apple Inc.’s iPhone. Production at suppliers like SanDisk and Samsung Electronics Co. has gotten ahead of demand, according to Daniel Berenbaum, an analyst at MKM Partners LP in New York.

Price declines accelerated in the latter part of the fourth quarter, Chief Financial Officer Judy Bruner said on a conference call yesterday. That, along with lower orders from some mobile-phone customers, will hurt sales in the first quarter, she said.

Sales in the current period will be $1.3 billion to $1.35 billion, Bruner said. Milpitas, California-based SanDisk was projected to have sales of $1.46 billion, the average estimate of analysts in a Bloomberg survey.

2012 Forecast

For the full year, sales will be $6.2 billion to $6.6 billion, Bruner said. Analysts on average predicted annual sales of $6.64 billion.

“We expect the majority of our 2012 year-over-year revenue growth to be in the second half as overall demand improves,” Bruner said on the call. The industry’s ability to lower costs of production through the introduction of new technology is decreasing, she said.

For the fourth quarter, sales rose 19 percent to $1.58 billion, the company said in a statement. Net income fell to $281.2 million, or $1.14 a share, from $485.5 million, or $2.01 a share, a year earlier. Analysts on average estimated earnings of $1.13 a share on sales of $1.58 billion.

Under Chief Executive Officer Sanjay Mehrotra, SanDisk has been trying to win more sales from makers of mobile phones and lessen its reliance on revenue from consumer flash drives and memory cards.

--Editors: Jillian Ward, Nick Turner

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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