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Technology Stocks : WDC/Sandisk Corporation
WDC 169.99-2.4%Nov 11 3:59 PM EST
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From: Pam2/16/2007 4:07:51 PM
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16:05 SNDK SanDisk Announces Cost Cutting Measures

16:05 SNDK SanDisk announces cost cutting measures (40.13 -1.02)

"Industry wide NAND component pricing has deteriorated by approximately 50% in the past two months due to excess supply of NAND components coupled with first quarter seasonally weak demand. This is impacting pricing for our retail and OEM products at a steeper rate than we had been anticipating and in order to maintain market share we now expect to lower Q1 prices for many of our products to 30%-40% below fourth quarter levels," said Eli Harari, Chairman and CEO of SanDisk. "Although we believe there will be strong pickup in demand for our products in the second half of the year, we do not have visibility as to when the current aggressive pricing cycle will run its full course, and gross margins are likely to remain under significant pressure for several quarters. To strengthen SanDisk's profitability during this time of aggressive industry pricing, we are proactively taking a number of measures to reduce our product costs and operating expenses. The expense reduction actions include several employee-related measures: 1) A worldwide reduction in our employee workforce of up to 10% of headcount, or approximately 250 employees. 2) A reduction in salaries for all executives. This will include a 20% cut in base pay for the CEO, 15% for the President and EVPs, and 10% for other VPs. 3) A freeze in salaries for all other employees. 4) A freeze in new hire staffing levels for most areas, although the company will continue to hire in strategic areas including product innovation and future generation technologies, such as x4 and 3D.
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