SanDisk Announces Record Revenues and Operating Income
Wednesday July 14, 4:18 pm ET
Year-over-Year Increase in Revenues of 85% and Operating Income of 136%
SUNNYVALE, Calif.--(BUSINESS WIRE)--July 14, 2004--SanDisk Corporation (NASDAQ:SNDK - News), the world's largest supplier of flash storage card products, today announced results for the second quarter ended June 27, 2004. Second quarter total revenues increased 85% to $433 million compared to the second quarter of 2003 and increased 12% from the first quarter of 2004. Second quarter net income was $71 million, compared to $41 million and $64 million for the second quarter of 2003 and the first quarter of 2004, respectively. Earnings per share were $0.38 per diluted share compared with $0.26 per diluted share in the same quarter of 2003 and $0.34 per diluted share in the first quarter of 2004.
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"Record results for our second quarter are a testimony to the success of SanDisk's strategy and unique business model, which combines vertical integration of leading edge technology, rapid introduction of differentiated products targeted at new applications, expanding worldwide retail distribution and a strong portfolio of patents to generate significant operating margins," said Eli Harari, President and CEO of SanDisk Corporation.
"The pricing moves that we initiated early in the second quarter stimulated consumer demand and resulted in 38% sequential quarterly growth in total megabytes and 24% sequential growth in average capacity per card sold in retail. Product gross margins improved to 35%, despite a 16% decline in average selling price per megabyte, because of a favorable mix of MLC and captive flash, and the positive impact of our product segmentation strategy; fully 25% of the retail revenue in the second quarter came from highly differentiated products. Late in the quarter we shipped first production cards employing our new 4Gbit NAND/MLC chip, and as planned we are starting to ramp 90 nanometer production in the third quarter," added Harari.
"I am particularly encouraged by the growing acceptance of flash cards and modules in dozens of new generation cell phones sporting mega pixel cameras, music players, video clips, video games and internet access, which we expect will be one of the major catalysts for strong growth in demand for our products in the next several years," said Harari.
Second Quarter Highlights
Product sales were $391 million, a growth of 16% sequentially and 83% year-over-year.
Total gross margin grew to 41% of revenues compared to 40% in the first quarter of 2004 and 38% in the second quarter of 2003.
Product gross margin increased to 35%, compared to 32% in both the first quarter of 2004 and in the second quarter of 2003.
Operating income was $110 million, a growth of 12% sequentially and 136% year-over-year.
Total megabytes sold in the second quarter were a record and increased 38% sequentially and 144% year-over-year.
Average price per megabyte sold in the second quarter declined 16% sequentially and 25% year-over-year.
Average density per card sold in retail increased sequentially to 236MB from 189MB.
Retail sales grew to 81% of product revenues and were particularly strong in North America and Europe.
Storefronts grew to approximately 80,000 with the rapid acceptance of our Shoot & Store(TM) products into the food and drug channel and with expansion into China.
Mobile phone products, including miniSD(TM), TransFlash(TM), RS-MMC(TM), and Memory Stick PRO Duo(TM) rolled out to retail customers in the worldwide mobile phone channel.
SanDisk Extreme(TM) and SanDisk Ultra® II high performance cards took top awards in independent performance tests and were among our fastest growing product lines.
Sales of the Cruzer® line of USB Flashdrive products continued strong growth, and productivity software is now shipping with the Cruzer Titanium.
Judy Bruner joined SanDisk as Executive Vice President and CFO and Catherine Lego rejoined SanDisk's Board of Directors and Audit Committee.
Conference Call and Guidance
SanDisk's second quarter 2004 conference call with guidance is scheduled for 2:00 p.m. Pacific Time, Wednesday, July 14, 2004. Today's teleconference prepared remarks, including third quarter guidance, will be posted to http:// www.corporate-ir.net/ireye/ir_site.zhtml?ticker=sndk&script=2100. The conference call will be web cast by CCBN and can be accessed live, and throughout the quarter, at SanDisk's website at www.sandisk.com/IR and at www.streetevents.com for registered streetevents.com users. To participate in the call via telephone, the dial in number is (800) 314-7867 or (719) 867-0640 for international callers. The call will also be available by telephone replay through Wednesday, July 21, 2004, by dialing (888) 203-1112 or, for international callers, (719) 457-0820 and entering the pass code 229067. A copy of this press release will be filed with the Securities and Exchange Commission on a current report on Form 8-K and will be posted to our website prior to the conference call.
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