Feeds

Cheap flash sinks SanDisk's profits

Misty margin-filled memories

Maximizing your infrastructure through virtualization

SanDisk's second quarter profits sunk 71 per cent as the #1 flash memory manufacturer suffered through declining prices, but promised market stabilization is in the cards.

Q2 income floundered at $28.5m during the quarter, a far reach from the $95.6m the company earned during the same period last year. According to SanDisk, the average price per megabyte sold declined 65 per cent from last year.

The company's revenue increased 15 per cent year-over-year, reaching $827m compared to $719m in Q2 '06.

License and royalty revenue for the quarter was $107m, up 30 per cent year-over-year.

“Product gross margins stabilized despite substantial price reductions in the second quarter," said SanDisk CEO Eli Harari. "We expect product gross margins to improve gradually in the second half of the year, driven by more moderate price declines resulting from an expected improvement in the balance between demand and supply, declining manufacturing costs and strength in our income from royalties."

The company expects to turn their profits around in the second half of 2007 and in 2008 with the bombardment of new flash memory-ready consumer electronics entering the market.

Harari's confidence sent SanDisk stock up nearly 6 per cent to over $3 a share in after-hours trading.

For the company's third quarter, they expect revenue in the range of $750m to $825m. License and royalty revenue is forecast between $105m and $115m.

While gross margins in the second quarter were at 16.2 per cent, Harari expects them to land between 17 and 21 per cent in the third quarter. ®

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
Carbon tax repeal won't see data centre operators cut prices
Rackspace says electricity isn't a major cost, Equinix promises 'no levy'
Disaster Recovery upstart joins DR 'as a service' gang
Quorum joins the aaS crowd with DRaaS offering
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.