Bloomberg News

SanDisk’s Revenue, Profit Top Estimates on Retail Sales

October 18, 2012

SanDisk Corp. (SNDK:US), a maker of flash memory for mobile devices, reported quarterly profit and revenue that beat analysts’ estimates on strong retail sales and high demand for mobile devices.

Third-quarter earnings excluding some items were 48 cents a share on sales of $1.27 billion, the Milpitas, California-based company said in a statement today. Analysts on average had estimated profit of 34 cents on revenue of $1.22 billion, according to data (SNDK:US) compiled by Bloomberg.

SanDisk benefited from robust demand from manufacturers of hand-held devices that use its type of memory, which is more compact and easier to update than other kinds. Profit was also boosted by increasing chip prices, said Betsy Van Hees, an analyst with Wedbush Securities Inc.

“SanDisk is definitely benefiting from reductions in Nand supply,” said Van Hees, by telephone, who upgraded the stock to outperform this week. “In this very difficult environment, SanDisk is clearly outperforming and the stars have aligned at least for the near term.”

Net income fell to $76.5 million, or 31 cents a share, from $233.3 million, or 96 cents, a year earlier.

SanDisk sells so-called Nand flash memory, chips for storing data in smartphones, and competes with companies including Micron Technology Inc. (MU:US) The memory-chip industry has scaled back supply enough to stem price declines and now needs increased demand to return to profitability, Micron Chief Executive Officer Mark Durcan said last week.

Demand Slump

Suppliers of parts for PCs are experiencing a demand slump as a sluggish economy curbs purchases and consumer spending shifts to tablets and smartphones.

SanDisk forecast fourth-quarter sales of $1.5 billion, plus or minus $50 million, Chief Financial Officer Judy Bruner said on a call with analysts today. That compares with the average analyst estimate of $1.51 billion.

Fourth-quarter gross margin, the percentage of sales left after deducting production costs, will be 33 percent, plus or minus two percentage points, Bruner also said. That compares with the average analyst estimate of 30.24 percent.

SanDisk’s shares rose as much as 7 percent to $45.88 in extended trading today after falling 3.4 percent to $42.86 at the close in New York. The stock has declined 13 percent so far this year.

To contact the reporter on this story: Ryan Faughnder in New York at rfaughnder@bloomberg.net

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


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Companies Mentioned

  • SNDK
    (SanDisk Corp)
    • $94.14 USD
    • 3.83
    • 4.07%
  • MU
    (Micron Technology Inc)
    • $33.09 USD
    • 1.27
    • 3.84%
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