Thursday, July 21, 2011

SanDisk Corp. (NASDAQ: SNDK): Q2 Earnings Preview 2011

SanDisk Corp. (NASDAQ: SNDK), the world's largest flash-memory device maker, is scheduled to release its first-quarter earnings after the closing bell on Thursday, July 21, 2011. Analysts, on average, expect the company to report earnings of 99 cents per share on revenue of $1.34 billion. In the year ago period, the company reported earnings of $1.08 per share on revenue of $1.18 billion.

SanDisk Corporation designs, develops, manufactures, and markets NAND-based flash storage card products that are used in various consumer electronics products. The company has beaten estimates the last four quarters. Revenue has climbed in the past four quarters.

In the preceding first-quarter, the Milpitas, California-based company's net income was $224 million, or 92 cents per share, compared to $235 million or $0.99 per share, in the year-ago quarter.  On an adjusted basis, the company earned $1.03 a share in the first quarter. Revenue increased 19 percent to $1.29 billion from $1.09 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 99 cents per share on revenue of $1.26 billion billion.

At its last earnings call in April, the company said that it expects second quarter total revenue to be between $1.3 billion and $1.35 billion. The company expects second quarter gross margin percentage to be similar to the first quarter

For the full year 2011, the company expects healthy supply demand balance in the industry. SanDisk's revenue forecast for 2011 is $5.3 billion to $5.7 billion, including license and royalty revenues similar to slightly higher than in 2010. The company raised its non-GAAP product gross margin range to 37% to 40%, compared to the previous range of 35% to 38%. SanDisk also lifted its total non-GAAP gross margin range to 41% to 44% compared to the previous range of 39% to 42%.

Global demand for flash memory has continued to remain strong, thanks to the introduction of a wide array of new handheld devices like smartphones, tablets, e-books. Analysts have noted that its stock is linked somewhat to Apple's (NASDAQ: AAPL), because Apple is such a voracious consumer of flash, which is found in iPads, iPhones and iPods. SanDisk sells removable flash-memory cards and supplies memory chips to Apple Inc., whose iPad, iPhone and iPod all use so-called Nand flash as their main storage for music and data. Apple’s new MacBook Air laptop, introduced in October 2010, also uses flash memory in lieu of a traditional hard-disk drive. SanDisk said in december that more computer makers are going to follow Apple Inc.'s example and offer machines with only solid state drives in the future, a transition that will benefit the flash-memory maker. Already, companies like EMC (NYSE: EMC) and IBM (NYSE: IBM) have thrown weight behind the technology. 

Moreover, SanDisk is also exploring the enterprise potential of SSDs. The enterprise solid-state-drive market is expected to post strong growth in the next few years. Gartner projects revenue for the market to grow from $994 million in 2010 to $4.2 billion in 2015. In May, SanDisk agreed to acquire Pliant Technology, Inc., a developer of enterprise solid state drives, for about $327 million in cash and certain equity-based incentives. SanDisk expects the transaction to be dilutive to its fiscal year 2011 adjusted earnings by 2 to 3 percent, and accretive to adjusted earnings in fiscal year 2012.

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