SanDisk results top estimates as memory chip prices rebound
(Reuters) - SanDisk Corp (SNDK.O) more than tripled its quarterly profit, beating analysts' estimates, after a fire at a rival chip maker increased prices at a time when Apple Inc (AAPL.O) and other users of its flash memory chips were launching new products.
The company, which also forecast current-quarter revenue largely above analysts' estimates, said it was shifting its focus toward higher-margin products such as solid-state drives.
Solid-state drives (SSDs) are viewed by many as the future of the disk drive industry as they are faster and unlike hard-disk drives they have no moving parts and hence are more sturdy.
Although SSDs are still more expensive than traditional hard disk drives, they are increasingly being built into laptop PCs and tablet computers like Apple's iPad as they are more durable and consume less power.
SSDs could be 25 percent of SanDisk's revenue next year, up from 3 percent in 2011, Pacific Crest Securities analyst Monika Garg said in a pre-earnings note.
SanDisk said it expects fourth-quarter revenue of $1.65-$1.725 billion, while analysts on average had expected $1.67 billion, according to Thomson Reuters I/B/E/S.
SanDisk's chips are used to store data such as movies and photos in smartphones, flash drives and tablets.
U.S. memory chip makers SanDisk and Micron Inc (MU.O) have been gaining as prices rebound from last year's lows. A fire at Korean rival SK Hynix Inc's (000660.KS) plant in China in September created a temporary shortage, boosting prices further.
Rival Micron reported higher quarterly revenue last week.
SanDisk's net income more than tripled to $277 million, or $1.18 per share, in the third quarter. Excluding one-time items, earnings were $1.59 per share.
Revenue rose 28 percent to $1.63 billion.
Analysts on average had expected a profit of $1.32 per share on revenue of $1.57 billion, according to Thomson Reuters I/B/E/S.
The Milpitas, California-based company's shares were up about 2 percent in extended trading, after closing at $62.94 on the Nasdaq on Wednesday.
(Reporting by Neha Alawadhi in Bangalore; Editing by Saumyadeb Chakrabarty)