SanDisk Drops On News Of Possible Dilution >SNDK
7:07 PM ET 2/2/09
SAN FRANCISCO (Dow Jones)--SanDisk Corp. (SNDK) swooned after company executives said during a conference call that the memory card maker might need to issue new shares to raise capital.
During the call, which followed fourth-quarter earnings that showed the Milipitas, Calif.-based company posting a $1.86 billion net loss, Chief Financial Officer Judy Bruner said the company had filed a shelf registration to replace one that is expiring in May. She said the company may issue new shares to pad its capital.
"Some form of equity financing may be a prudent insurance policy this year," Bruner said during the call. "Our focus is to insure an adequate liquidity cushion for our business given industry and economic conditions."
The news wiped out a strong rise in the company's shares that followed the earnings release. Traders were heartened by SanDisk's $863.9 billion in revenue, which beat analysts' expectations, even though it was 31% lower than the same period a year earlier.
SanDisk, which makes flash-memory and digital-media devices, reported a net loss of $1.86 billion, or $8.25 a share, compared with net income of $105.8 million, or 45 cents a share, a year earlier. The loss was SanDisk's third consecutive quarterly loss.
SanDisk had the opportunity to sell itself to South Korea's Samsung Electronics Co. (005930.SE), the world's largest maker of flash memory, which withdrew a roughly $5.8 billion unsolicited offer to buy SanDisk at $26 a share in October. SanDisk had rejected the offer, saying Samsung was taking advantage of sliding share prices to buy the company cheaply. Instead, SanDisk sold Japan's Toshiba Corp. (6502.TO) part of a joint manufacturing venture they ran.
In after-hours trading, SanDisk shares were changing hands at $9.45, off over 17% from the regular session close of $11.28.
The shelf registration, filed on Monday with the Securities and Exchange Commission, will let SanDisk sell an indeterminate amount of common stock, preferred stock, debt securities, warrants, rights and units.
The latest results included a $845.5 million write-down of goodwill, a $175.8 million write-down related to an acquisition and $31.4 million in restructuring charges. Excluding stock-based compensation, acquisition-related charges and other items, the loss was $1.65 a share compared with earnings of 69 cents a year earlier.
Product revenue sank 34%, while license and royalty revenue, for SanDisk's valuable patents, slid 4.8%.
Analysts estimated a loss of 60 cents a share on revenue of $767 million, according to a poll by Thomson Reuters.
Gross margin was negative 39.4%, compared with positive 35.5% a year earlier. |
