SanDisk reports Q4 loss; beats sales estimates

SanDisk, maker of flash-media storage cards for digital cameras and mobile phones, reported a fourth-quarter loss of $1.86 billion, or $8.
Written by Sam Diaz, Inactive

SanDisk, maker of flash-media storage cards for digital cameras and mobile phones, reported a fourth-quarter loss of $1.86 billion, or $8.25 a share, on sales of $864 million, a 31 percent decline over the $1.25 billion during the same quarter a year ago but above analysts expectations of $766.7 million. (Statement)

Excluding one-time expenses of $1.91 billion, the adjusted net loss was $1.65 a share. Analysts had been expecting the company to report a loss of 60 cents per share. For the fiscal year, the company reported a loss of $2.07 billion, or $9.19 per share, compared to income of $219 million, or 93 cents per share, in 2007. Total cash, short-term, and long-term investments at the end of the year was $2.5 billion, down from $2.9 billion at the end of 2007. In a statement, Chairman and CEO Eli Harari, said:

...we are very disappointed with our fourth quarter bottom line results, which included significant asset impairment and inventory related charges. We are focused on managing our business through the difficult global economic climate and limited visibility in 2009. We are taking significant steps to curtail our captive output, conserve cash, and reduce capital and operating expenditures. We continue to invest in technology leadership while creating new demand with the exciting products we announced at the January 2009 Consumer Electronics Show. We believe that drastic industry-wide capital expenditure cuts announced for 2009 will contribute to a better balance between supply and demand and an improved pricing environment in our markets later in 2009 and into 2010.

The company also reported some interesting metrics that put into perspective how much the flash-memory business has changed in the past year. They include:

  • Total megabytes sold in the fourth quarter increased 123% year-over-year and 49% sequentially.
  • Average price per megabyte sold in the fourth quarter declined 70% on a year-over-year basis and 28% sequentially.
  • Average retail card capacity in the fourth quarter was 3.79 gigabytes, an increase of 114% on a year-over-year basis and 31% sequentially.
  • For fiscal 2008 total megabytes sold increased 125% and average price per megabyte sold declined 62%, both on a year-over-year basis.

Other highlights from the quarter included:

  • A deal with Toshiba to transfer more than 20% of SanDisk’s "captive fab capacity" to Toshiba for a value of about $890 million. The company said the deal "considerably strengthens SanDisk’s financial position, lowers inventory commitments, and enables a more rapid return to a captive/non captive supply model"
  • The U.S. launch of slotMusic cards - microSD cards with music pre-loaded music that can be played back on mobile phones, computers or mp3 players that read the cards.
  • The announcement of the Sansa slotRadio player (which plays the above-mentioned slotMusic cards), which will be available in the Spring.

Also see: SanDisk-Toshiba tweak manufacturing joint venture

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