SanDisk chief Eli Harari delivered some odd news for folks tracking the memory market: Flash memory prices and demand are actually rising.
That takeaway---which counts as a big revelation for financial/tech nerds---came on SanDisk's first quarter earnings conference call. SanDisk's first quarter was weak as expected, but the company did manage to top Wall Street estimates. SanDisk even projected better-than-expected second quarter results.
By the numbers, SanDisk reported a net loss of $208 million, or 92 cents a share, on revenue of $659 million, down from $850 million a year ago. On a non-GAAP basis, SanDisk reported a net loss of $108 million, or 48 cents a share. Sure SanDisk's quarter stunk, but it did beat estimates by 28 cents a share.
But the real stunner is that demand was up. Even selling prices are increasing.
Harari said on SanDisk's earnings conference call:
Demand for our products in the first quarter was stronger than expected and is holding up in April. NAND component pricing trends, which began a U-turn late in the fourth quarter of 2008, has continued to improve in the first quarter and into April.
In a nutshell, Harari said that flash memory suppliers cut back production dramatically as demand has picked up.
In the U.S. you need to only pickup any major newspaper or turn on the TV to see compelling [hedge] by Apple [passing] thousands of third-party applications for the iPhone. These evidenced the handsets transformation into a powerful mobile computer. And it is into only Apple, rooms newly launched up store, the rapid adoption of the [under drawn] platform that prompts three Nokia and Microsoft roadmaps all these show what enhances can become any large measure that have already become. These smart phones along with other mobile Internet devices so-called MIDs and notebook PCs are increasingly ubiquitous always connected and often subsidized by your local network operator. The opportunity for us is these devices will have to be contented with wireless bandwidth and coverage limitations making off-line, local cashing of increased amount of data central to devices usability. Paradoxically, the promise of always-connected devices in cloud computing is resulting in ever greater need for local storage on the devices themselves. Indeed, we are seeing increasing demand for major players in the mobile ecosystem for our comprehensive mobile storage solutions including Mobile Card, embedded iNAND and solid state drives for notebook PC's.
SanDisk CFO Judy Bruner even noted that SanDisk was able to raise prices (gasp!).
Now the big question is whether SanDisk's pricing power will last. Deutsche Bank analyst Bob Gujavarty said "we believe NAND ASPs have likely peaked and demand growth remains uncertain."
For now though it's a small victory for SanDisk.