Flash-memory card maker SanDisk Corp. (SNDK: Quote), Thursday reported a lower profit for the first quarter, hurt largely by weak prices and increased expenses amid lower demand for its products. SanDisk's quarterly earnings and revenues fell short of analysts' expectations. Looking ahead, the company anticipates the next quarter also to be weak.
The news hurt investor sentiments, dragging SanDisk shares down by 14 percent in after-hours trade.
Chief Executive Sanjay Mehrotra said, "Our first quarter results were adversely impacted by lower-than-expected pricing and demand weakness in certain segments and we expect similar trends in the second quarter as well."
On a more positive note, Mehrotra observed, "We believe a seasonally stronger demand environment in the second half of the year, combined with our diversifying portfolio of mobile and SSD solutions, will allow us to deliver strong sequential revenue growth in the third and fourth quarters."
Gross margin, the percentage of sales left after deducting production costs, for the first quarter plummeted to 34.5 percent from 42.6 percent last year. Operating margin also dropped to 15.9 percent from 27.0 percent.
SanDisk, which makes flash memory for smartphones, tablets and other devices, said first-quarter revenues declined 7 percent to $1.21 billion, below analysts' estimate of $1.23 billion.
The Milpitas, California-based company' first-quarter net income dropped to $114.4 million or $0.46 per share from $224.1 million or $0.92 per share last year.
Excluding special items, net income slipped to $0.63 per share from $1.03 per share a year ago. On average, 17 analysts polled by Thomson Reuters expected earnings of $0.70 per share for the quarter. Analysts' estimates typically exclude one-time items.
SanDisk, which once focused mainly on memory cards and pen drives, have extended its business into devices like smartphones and tablets. Despite the huge demand for these multimedia devices, SanDisk has reported a series of consecutive profit declines, hurt mainly by lower margins reflecting increasing raw material costs, lower demand and increased selling and research overheads.
SNDK closed Thursday's regular trade at $40.47, down $0.29 or 0.71%, on a volume of 7 million shares on the Nasdaq. In after hours, the stock dropped $3.55 or 8.77%.
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by RTT Staff Writer
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