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SanDisk cuts 250 jobs on falling prices

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SanDisk is to axe 250 staff - 10 per cent of the payroll - to combat plunging memory stick prices.

Executive salaries will be cut by between 10 and 20 per cent while the salaries of all other employees will be frozen with a hiring freeze introduced in most parts of the company, in measures aimed to save $35m annually.

Sandisk expects to reduce product prices by 30 to 40 per cent in the first quarter of this year.

"Although we believe there will be strong pickup in demand for our products in the second half of the year, we do not have visibility as to when the current aggressive pricing cycle will run its full course, and gross margins are likely to remain under significant pressure for several quarters." said Eli Harari, chairman and chief executive.

"To strengthen SanDisk's profitability during this time of aggressive industry pricing, we are proactively taking a number of measures to reduce our product costs and operating expenses," he said.

Most of the lost jobs will go in March and will come from all areas of the business. It is unknown how this will affect its European headquarters in Dublin, where 50 people work. SanDisk is headquartered in Milpitas, California and more than half the firm's sales come from outside the US.

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