SanDisk Earnings: Tops Revenue Estimate, Shares Surge

S&P 500 (NYSE:SPY) component SanDisk Corporation (NASDAQ:SNDK) posted a decrease in profit as revenue declined. SanDisk is a multinational corporation whose main focus is the design, development, manufacturing and marketing of flash memory card products. Its data-storage solutions include removable cards and universal serial bus drives, which can be used in a wide gamut of consumer electronics products, such as digital cameras and mobile phones.

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SanDisk Earnings Cheat Sheet for the Second Quarter

Results: Net income for the semiconductor-memory chips fell to $13 million (5 cents per share) vs. $248.4 million ($1.02 per share) a year earlier. This is a decline of 94.8% from the year-earlier quarter.

Revenue: Fell 24.9% to $1.03 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: SanDisk Corporation fell short of the mean analyst estimate of 17 cents per share. Analysts were expecting revenue of $1.02 billion.

Quoting Management: “We delivered second quarter results in line with our forecast, reflecting short-term weakness in our mobile OEM sales, strength in retail, especially in international markets, and growth in our enterprise and client SSD products,” said Sanjay Mehrotra, president and chief executive officer of SanDisk. “I am pleased to report that our SSD revenues achieved 10% of second quarter sales with growing adoption of our solutions by major OEMs. We also made good progress on our embedded product roadmap for mobile customers. We believe that strengthening industry fundamentals and our expanding portfolio of solutions will contribute to improving financial results in the second half of 2012.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 17.4 percentage points to 27.2% from the year-earlier quarter. In that span, margins have contracted an average of 7.4 percentage points per quarter on a year-over-year basis.

For two quarters in a row, the company has come in under analyst estimates. In the first quarter, it missed expectations by 5 cents with net income of 56 cents versus a mean estimate of net income of 61 cents per share.

Revenue has fallen in the past two quarters. In the first quarter, revenue declined 6.8% to $1.21 billion from the year-earlier quarter.

Looking Forward: Over the past ninety days, the average estimate for the third quarter has fallen from $1.16 per share to 37 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. For the fiscal year, the average estimate has moved down from $3.78 a share to $1.70 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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