UPDATE 2-SanDisk reports profit, sees market improving

(Recasts first paragraph; adds share move, comments from CEO)

By Jim Finkle

BOSTON, July 19 (Reuters) - SanDisk Corp. (SNDK.O), the No. 1 maker of flash storage cards, reported a profit on Thursday after two consecutive quarters of losses and said it expects the memory market to improve through 2008.

Shares of the company jumped nearly 8 percent in extended trading after Chief Executive Eli Harari predicted demand for some of SanDisk's memory products could outstrip supply in the coming months.

SanDisk said fiscal second-quarter net income fell 70 percent to $28.5 million, or 12 cents a share, from $95.6 million, or 47 cents, in the year-ago period due to a prolonged decline in memory prices.

Revenue rose 15 percent to $827 million, beating the average analyst forecast of $793 million, according to Reuters Estimates.

The company, whose memory is used in cell phones, music players and cameras, said the average price per megabyte sold dropped 65 percent from a year ago. That was its biggest decline in at least a year.

But Harari said the market appears to be turning around.

"We expect product gross margins to improve gradually in the second half of the year, driven by more moderate price declines resulting from an expected improvement in the balance between demand and supply, declining manufacturing costs and strength in our income from royalties," he said in a statement.

The company said it had a profit, excluding items, of 30 cents a share during the quarter, which ended July 1.

Analysts had expected a second-quarter profit of 16 cents a share, according to Reuters Estimates. It wasn't immediately clear whether the two figures were comparable.

SanDisk shares were quoted at $60.20 in extended trading. They had closed $1.19 lower at $55.96 on Nasdaq before the company released its results.