Don, Sandisk's GM was lower than expected mainly due to two factors: the power outage at the factory and the weakness of the dollar/strength of the yen. They accounted for about a 4.5-5% swing. FWIW, S&P's analysis on Sandisk has been pretty weak for a long time now.
Here is the relevant exchange on gross margins in the CC last night:
Tristan Gerra - Robert W. Baird & Co. Incorporated
I may have missed it, but did you provide a breakdown on your gross margin for the quarter as well as yen exchange and all sort fab outage?
Judy Bruner
I did say that the power outage resulted in an $18 million charge to the fourth quarter. So you can calculate that, that is close to a 1.5 point impact on the gross margins. And in terms of the yen exchange rate, I didn't mention that, but I'll tell you that the underlying yen exchange rate in our cost of sales in the fourth quarter moved an unfavorable approximately six percentage points, relative to the third quarter. I'm talking six percentage movement in the yen exchange rate, not in the gross margin percentage.
....
Bobby Gujavarty - Deutsche Bank AG
And Judy, can you just remind me, is it about a yen, a 10% move and the dollar yen is about a one percentage point impact the gross margin is that the correct ration or do I have it wrong?
Judy Bruner
No, the impact is more than that. What we've typically said is that a five percentage move in the yen can cost about a two to three-point movement in the gross margin percentage. |
