ULLtraDIMM dam plus inventory oops smacks SanDisk’s Q4 growth

Impact of the Netlist-Diablo case

CFO Judy Bruner remarked: “We took inventory for our ULLtraDIMM product, which has become the subject of a court injunction stemming from litigation to which we are not a party.”

Bruner said there was an effect from the Netlist-Diablo court case and the ULLtraDIMM ship injunction."We took inventory reserves related to a faster-than-expected decline in demand for certain end-of-life OEM products, as well as for our ULLtraDIMM product, which has become the subject of a court injunction stemming from litigation to which we are not a party."

This, plus a lower mix of high-margin retail products and higher memory costs "contributed to the sequential decline in gross margin and the miss from our forecast", said Bruner.

Mehrotra said there was a continuing impact "in 2015 [and] our revenue will be challenged in the first half of the year". More good news there then.

+Comment

So Happy New Year, SanDisk: what a killer quarter – supply chain issues, then losing a major account... Just to top things off, your ULLTraDIMM tech supply partner Diablo is caught up in an injunction, catching you in the flames.

The earnings call Q&A session was fun. Mehrotra refused to identify the lost client SSD customer.

Mehrotra must have been spitting red hot rivets. No CEO likes delivering such news. Samsung and Micron must have had big smiles on their faces and Netlist a gaping wide grin.

The company announced a dividend and share buy-back programme to keep investors happy. Mehrotra said all this “is really nothing but a temporary setback. SanDisk had setbacks in the past that and always emerged even stronger. I am confident that we shall do the same again this time.” ®