Tags: SanDisk | mobile | business | SNDK

SanDisk Growing Again in Mobile Business

By    |   Tuesday, 27 Dec 2011 07:42 PM

SanDisk Corp. (SNDK) is a top producer of data storage for mobile devices that is growing again following a forgettable stalemate in sales. But the company remains vulnerable to wafer-thin profit margins, or none at all, in its highly competitive business.

SanDisk, a leader in sales of removable data storage cards for digital cameras and mobile telephones, passed $4 billion in sales in 2010 and was on pace to do so again in 2011.

The Milpitas, Calif., company collected $4.08 billion of revenue in the nine months ended Oct. 3, up from $3.49 billion in the same period last year.

Net income in the nine months totaled $705 million, or $2.90 per diluted share, down from $814 million, or $3.41 per diluted share, in the same period in 2010.

Founded in 1988, SanDisk is the inventor and a leading seller of a data-storage technology called NAND flash memory, also known as non-volatile memory, which means a device will retain data after the power is switched off.

The company makes NAND flash data-storage products, in the form of removable cards and embedded memory chips, for consumer electronic devices such as phones, cameras, gaming consoles, GPS devices and laptop computers. Among SanDisk's competitors in the flash memory market is chip giant Intel (INTC).

SanDisk purchases most of its flash memory from cooperative production ventures with Japan’s Toshiba, a large and diversified manufacturer of  products as communications equipment, electronic components, power systems and household appliances.

Despite the year-to-date decline in earnings, most analysts following SanDisk had buy ratings on the stock in late December.

Credit rating upgrade

Standard & Poor's analyst John Moore recently raised his corporate credit rating of SanDisk to "BB" from "BB-" and said the rating outlook for the company was stable.

"SanDisk's operating conditions should remain favorable in 2012," Moore said in a Dec. 20 press release by S&P, "as the proliferation of wireless communications devices supports NAND industry prospects for unit demand, cautious capacity expansion and revenue growth."

The company recorded big increases in both revenue and net income in 2010. But its financial performance has been uneven in recent years.

Revenue totaled $4.82 billion in 2010. The top line was range-bound in the preceding four years, growing to $3.89 billion in 2007 from $3.25 billion in 2006 before receding to $3.35 billion in 2008 and $3.56 billion in 2009.

SanDisk earned $1.3 billion of net income, or $5.44 per diluted share, last year. Net income totaled just under $200 million in both 2006 and 2007 before SanDisk recorded a $1.9 billion net loss in 2008. The company returned to profitability in 2009, earning $415 million.

The company's cost of producing flash memory has been declining, but competition can depress selling prices even faster.

"Price declines exceeded our cost declines in 2008, 2007 and 2006," the company reported in its annual 10-K filing this year with the U.S. Securities and Exchange Commission. "We must reduce our cost per gigabyte at a rate similar to the change in the selling price per gigabyte."

SanDisk will release its earnings report for the fourth quarter of 2011 around Jan. 26.

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Companies
SanDisk Corp. (SNDK) is a top producer of data storage for mobile devices that is growing again following a forgettable stalemate in sales. But the company remains vulnerable to wafer-thin profit margins, or none at all, in its highly competitive business. SanDisk, a...
SanDisk,mobile,business,SNDK
520
2011-42-27
Tuesday, 27 Dec 2011 07:42 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved