SanDisk Soars on Earnings Beat
The Milpitas, Calif.-based company reported non-GAAP earnings of $51 million, or 21 cents a share, on $1.03 billion or revenue for the second quarter, topping the estimates of analysts polled by Thomson Reuters, who were looking for 18 cents a share and $1.02 billion in revenue.
Revenue may have declined 14% sequentially and 25% year-over-year, but the potential in the company's enterprise business should not be underestimated, according to CEO Sanjay Mehrotra.
"I am pleased to report that our SSD
Once known for producing small storage devices, SanDisk has developed a business selling flash memory chips used in mobile devices. "As we go forward into the second half of 2012, we anticipate the launch of several new smartphones and tablets, along with a number of SSD-equipped Ultrabooks and other end-client PCs to drive continued increases in demand for NAND Flash," Mehrotra said during the earnings call. "As a result, we expect an improved industry supply and demand and pricing environment in the second half of 2012."
SanDisk's second-quarter earnings beat JP Morgan analyst Harlan Sur's forecasts. In research note to clients on Friday, he adjusted his price target from $43 to $47 and maintained a "neutral" rating, citing SanDisk's "strong design win traction with major OEMs" as one source of growth.
"SNDK's strategy to focus on capturing more share at the tier-1 smartphone vendors is now paying off as the company has successfully developed and qualified new mobile embedded form factors including its latest generation iNAND product (Extreme) and customized embedded modules for smartphone/tablet OEMs. We believe these new products/design wins and highmargin SSD (both client and enterprise) will drive growth in a seasonally strong 2H