Getting hit hard after hours....missed on both revenue and earnings.
biz.yahoo.com
SanDisk Announces Third Quarter Results
Wednesday October 13, 4:05 pm ET
Revenues Increase 45% Year over Year and Operating Margin at 21%
SUNNYVALE, Calif.--(BUSINESS WIRE)--Oct. 13, 2004--SanDisk Corporation (NASDAQ:SNDK - News), the world's largest supplier of flash storage card products, today announced results for the third quarter ended September 26, 2004. Third quarter total revenues increased 45% to $408 million compared to the third quarter of 2003 and decreased 6% from the second quarter of 2004. Third quarter net income was $54 million, compared to $15 million* and $71 million for the third quarter of 2003 and the second quarter of 2004, respectively. Earnings per share were $0.29 per diluted share compared with $0.09* per diluted share in the same quarter of 2003 and $0.38 per diluted share in the second quarter of 2004.
ADVERTISEMENT
"Industry wide supply of NAND flash memory increased at a faster rate than the increase in demand during the summer months. Although we sold a record numbers of units and megabytes, we experienced a steeper than expected average price per megabyte decline of 22% compared to the second quarter. This resulted in third quarter revenues 6% below the second quarter and product margins approximately 6 points below the second quarter and 1 point below the low end of our guidance at the beginning of the quarter. Despite aggressive price declines, we were able to generate 21% operating margins and $129 million in cash from operations for the quarter," said Eli Harari, President and CEO of SanDisk Corporation.
"During the third quarter we introduced an array of exciting new products that are starting to ship this holiday season, including the world's fastest flash cards - our new line of SanDisk Extreme III(TM) cards, and a new line of flash digital music players that we introduced yesterday and which we expect to become a major new product category for us. We continue to make steady inroads into mobile phones, and are shipping flash card bundles to Motorola, Sony Ericsson, Samsung Mobile, NEC and Siemens, among others. In the third quarter we shipped more than 1 million TransFlash(TM) modules, and we currently expect seven leading handset OEM's to introduce more than 40 handset models using TransFlash(TM) in 2005, " Harari added.
"We are optimistic about global demand for our products in the traditionally strong fourth quarter. We have a front row seat in what we believe are some of the fastest growing markets in consumer electronics, mobile handsets, USB Flashdrives and digital music players. In the fourth quarter we expect to break for the first time the 10 cents per megabyte price point at the consumer level for our 512 megabyte and gigabyte capacity cards. This is one tenth of the price of flash cards just three years ago and represents a major milestone for flash storage, which we believe will accelerate the wide-scale adoption of our flash cards in numerous mobile and consumer applications. We expect to achieve this price point while maintaining our profitability through significant reductions in our captive production costs in the fourth quarter as we ramp up production of our newest, leading edge 90 nanometer NAND/MLC 4 gigabit Flash memory chips, which deliver significantly lower cost per megabyte than our current .13 micron production technology. With proper execution, we believe we are well positioned to exceed the $500 million quarterly revenue mark for the first time in the fourth quarter," said Harari.
Additional Third Quarter Financial Results and Highlights
Product sales were $365 million, a growth of 41% year-over-year and a decrease of 7% sequentially.
Average price per megabyte sold in the third quarter declined 34% year-over-year and 22% sequentially.
Income from license and royalties increased to $43 million from $42 million in the second quarter.
Total gross margin was 36% of revenues compared to 40% in the third quarter of 2003 and 41% in the second quarter of 2004.
Product gross margin was 29%, compared to 35% in both the third quarter of 2003 and in the second quarter of 2004.
Operating income was $84 million, a growth of 25% year-over-year and a decline of 24% sequentially. Operating margins were 21%, compared to 25% in the prior quarter.
Cash flow from operations was $129 million.
Total megabytes sold in the third quarter were a record and increased 115% year-over-year and 20% sequentially.
Average density per card sold in retail increased sequentially to 254MB from 236MB.
OEM sales grew to 22% of product revenues from 19% in the prior quarter with strength in the mobile handset market.
The TransFlash(TM) mobile module sold over one million units during the quarter.
SanDisk Ultra®II high performance cards took top awards in independent performance tests and the Ultra products were among our fastest growing products.
SanDisk global brand advertising campaign expanded to North American TV advertising during the 2004 Athens Olympics.
M-Systems and SanDisk signed a strategic collaboration and patent cross licensing agreement to jointly develop and promote a new USB Flash Drive platform.
Toshiba and SanDisk signed an agreement for the new 300mm NAND Fab at Toshiba's Yokkaichi facility currently scheduled to start production late in 2005. |
