Tags: SanDisk | Sales | Forecast | stock

SanDisk Declines Most Since January on Lower Sales Forecast

Wednesday, 04 April 2012 10:04 AM

SanDisk Corp., the biggest maker of flash-memory cards, fell the most in two months after cutting its forecast for first-quarter sales and profitability, citing weaker-than-expected pricing and demand for components that store data in mobile phones.

The stock declined 9 percent to $45.52 at 9:31 a.m. New York time after the company’s forecast yesterday. Earlier, SanDisk had lost as much 9.9 percent for the steepest intraday drop since Jan. 26. The Milpitas, California-based company’s shares had risen 1.7 percent this year before today.

SanDisk and its competitors are pumping out more electronics components than the consumer-electronics industry needs, according to Daniel Berenbaum, an analyst at MKM Partners LLC in New York.

“Demand is OK, but there’s an awful lot of supply out there,” said Berenbaum, who has a neutral rating on SanDisk. “It’s a supply-driven business.”

Revenue in the quarter that ended April 1 will be about $1.2 billion, compared with an earlier forecast for $1.3 billion to $1.35 billion, SanDisk said in a statement. Gross margin, a yardstick of profitability, will be below 39 percent to 42 percent, the company’s previous prediction, said SanDisk, which also makes the chips that go into flash-memory cards.

Under Chief Executive Officer Sanjay Mehrotra, SanDisk has been trying to win more chip sales from makers of mobile phones and lessen its reliance on revenue from memory cards, such as those used in digital cameras.

Gross margin measures the percentage of sales remaining after deducting the cost of production.

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Wednesday, 04 April 2012 10:04 AM
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