SanDisk's sales warning morphs into ultrabook worries

SanDisk's sales warning morphs into ultrabook worries

Summary: Weak NAND pricing is to blame for SanDisk's revenue warning, but analysts also wonder about sluggish ultrabook sales too.

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TOPICS: Hardware
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SanDisk's terse profit warning for its fiscal first quarter may reflect a little more than pricing issues for Flash memory. Ultrabook sales may be hampering SanDisk too, said analysts.

In a statement, SanDisk said that the company will deliver first quarter revenue of about $1.2 billion, down from its previous range of $1.3 billion to $1.35 billion. Wall Street was looking for sales of $1.34 billion and profits of 91 cents a share. Also see: SanDisk: Flash pricing, demand weaker than expected

Analysts said that SanDisk's first quarter flop reflects weaker memory prices. In fact, NAND memory is the only thing that's falling in a PC bill of materials. On the surface, SanDisk's warning may not be surprising, but if you connect the dots it's possible that the company is taking a hit on weak ultrabook sales and the solid state drives (SSDs) that ride shotgun.

In a research note Jefferies analyst Sundeep Bajikar said:

We believe SanDisk's Q1 miss is consistent with weaker NAND market pricing, and highlights risk of disappointment in SSD for PC/Ultrabook...We think SSD penetration in Ultrabook could disappoint, due to a combination of slower than expected Ultrabook ramps, and faster declines in HDD prices relative to NAND, making NAND less attractive for bulk storage.

Other analysts said that SanDisk was also hurt by weaker retail sales, which account for 40 percent of revenue. Wedbush Securities analyst Betsy Van Hees said that SanDisk could have a challenging environment for the second half of 2012. Specifically, she's looking for better visibility on enterprise and consumer SSD sales.

Bajikar noted that SanDisk's fortunes may improve along with enterprise SSD adoption.

For now, analysts are on standby until SanDisk executives lay out more detail on the company's earnings conference call. Don't be surprised if ultrabooks come up as a topic.

Topic: Hardware

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6 comments
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  • Duh!

    When Intel come out and say that they are planning 3 generations of the Ultrabook in the next 12 months, it isn't a surprise if the first generation doesn't sell well!

    Here's a c*ppy Ultrabook with SandyBridge, if you wait a couple of months, you can get a better machine, with IvyBridge processor... Oh, and if you wait a few more months, they will have touch as well.

    That must have been one of the worst brand launch fails in a long time.

    Reminds me a bit of Ratner.
    wright_is
    • Ultrabooks - Intel's Wet Dream of Being Apple

      Intel's CEO needs to stop pumping his Ultra-dream and realize that Intel is a CHIP company.

      Since when does a CHIP manufacturer start attacking an exclusive customer, Apple? Strange times.
      RichardEich
  • Oh, analysts...

    I like how "first quarter revenue of about $1.2 billion" can be considered a 'flop'. ;)
    johnd126
    • Analysts

      Analysts are a breed apart. They seem to "think" what things should be in their unusual minds and then wring their hands when their brilliant predictions don't pan out.
      Then we have Wall Street behaving like God and acting like the Three Stooges.
      Believe it or not, the idea of enterprise was to create a Product, create Employment, benefit the Customer, benefit the Community, and turn a Profit.
      Somehow, Wall Street seems to turn a blind eye to all these concepts except of course to the Profit area. And then we wonder why the first 4 aren't healthy.
      Interesting times ahead.
      da philster
  • Analysts

    I totally agree with da philster. Profit is the only variable in the Wall Street calculation.
    Hal_9001
  • Weak pricing?

    Wow, after years of existence, SSDs still keep the weird high prices, extremely unaligned with reality.

    If someone was basing their revenue plans on keeping the high prices, then they deserve to fail with this expectation.

    It is expected that SSD prices will go down, because these prices are way higher than they could be, at this time. Little competition will not hurt, even if it gets SanDisk out of business.
    danbi