2nd UPDATE: SanDisk 4Q Profit Jumps 43%; Provides Strong View
6:14 PM ET 1/27/11
NEW YORK (Dow Jones)--SanDisk Corp. (SNDK) reported a record fourth quarter and provided strong first-quarter and full-year guidance as the flash memory maker benefits from soaring demand for smartphones and other mobile devices.
SanDisk, once mainly known for small storage cards and thumb drives sold in retail stores, sells flash memory chips for devices like smartphones, tablets and digital music players. The increasing amount of songs, videos and other data stored on mobile devices has helped boost demand for flash even as memory supplies remain tight.
"Accelerating momentum" in mobile devices and gains in Asia Pacific markets helped SanDisk post better-than-expected results for the fourth quarter.
"The market environment continues to be robust, and we expect 2011 to be another strong year for SanDisk with smartphones and tablets continuing to lead our growth," SanDisk President and Chief Executive Sanjay Mehrotra said in a release.
The company projected first-quarter revenue of $1.2 billion to $1.275 billion, above analysts' expectations for $1.16 billion. For the year, SanDisk expects revenue of $5.3 billion to $5.7 billion compared to Street estimates of $5.29 billion, as well as adjusted gross margins of 39% to 42%.
Chief Financial Officer Judy Bruner said on a conference call that retail demand for flash memory products should be lower sequentially in the first quarter due to normal seasonality, while demand from original-equipment manufacturers continues to grow.
SanDisk will face some supply constraints in the first quarter in part due to a power outage at a Toshiba Corp. (6502.TO) factory in Japan in the fourth quarter, Bruner said. Toshiba and SanDisk partner to make flash memory chips. Bruner said first-quarter supply will be reduced by less than 10%.
She added that fourth-quarter results included an $18 million charge related to the outage.
The stock, up 55% since the end of August, initially slid in after-hours trading, but then recovered and recently edged up 12 cents to $51.44 following the strong guidance.
SanDisk reported a profit of $485.5 million, or $2.01 a share, up from $339.5 million, or $1.45 a share, a year earlier. Excluding items such as a $203 million tax-provision benefit and stock-based compensation, earnings rose to $1.27 cents from $1.18. Analysts polled by Thomson Reuters, which typically exclude some items, had most recently forecast earnings of $1.09.
Revenue rose 6.9% to $1.33 billion. The company previously had forecast revenue of between $1.25 billion and $1.325 billion.
Gross margin fell to 43.4% from 48.4%.
Average price-per-gigabyte slid 30% from year-earlier levels and declined 15% from the prior quarter.
Bruner said the price decline in the first quarter will be "relatively modest, including the impact of moving to higher average capacity." The decline will be "somewhat higher" in 2011 than in 2010, she added.
To respond to growing demand, Mehrotra said SanDisk plans to move forward with plans to ramp a new facility, "Fab 5," in the third quarter. The company's plan to expand capacity in "Fab 4" is "proceeding well" and should be complete by mid-2011, he added.
"We expect a healthy balance between demand and supply for the industry in 2011," Mehrotra said. |
