* Optimistic that 2011 results in upper half of forecast
* Supply growth moderating -SanDisk CEO
* Balance seen in 2011 after two years of supply shortages
(Adds forecast, updates shares)
By Gabriel Madway
SAN FRANCISCO, Feb 24 Flash memory supplier
SanDisk Corp SNDK.O said healthy trends in the industry give
the company optimism that its revenue and gross margin for 2011
will land in the upper half of its previously forecasted
"We are encouraged by the strength of the supply-demand
environment that we are seeing so far this year and in the
first quarter, and this gives us optimism," SanDisk Chief
Financial Officer Judy Bruner said during the company's analyst
meeting on Thursday.
SanDisk shares closed 1.8 percent higher.
The company has forecast 2011 revenue of $5.3 billion to
$5.7 billion, and gross margin of 39 percent to 42 percent.
Flash memory is a commodity product, and SanDisk's fortunes
are in large part determined by the equilibrium of supply and
demand in the industry and its impact on pricing.
SanDisk said NAND flash memory supply growth is moderating,
and the company sounded confident that the industry will remain
in balance amid strong demand.
The overall NAND flash market is expected to grow to
roughly $23 billion this year, from less that $20 billion last
SanDisk Chief Executive Sanjay Mehrotra said demand for
flash will increase by a factor of 10 by 2014, as consumers
clamor for smartphones and tablets like Apple Inc's (AAPL.O)
iPad, which use flash for storage, as well as newer
applications like solid-state drives in personal computers.
Although more flash production capacity is coming online,
Mehrotra downplayed the risk that oversupply will hurt prices.
"This is my key message regarding supply, that the outlook
for supply growth is moderating," Mehrotra said.
SanDisk's shares have risen 70 percent over the past year
as the NAND flash industry has seen relative price stability.
SanDisk is the No. 1 supplier of flash memory cards sold to
consumers at retail. But two-thirds of the company's sales now
come from manufacturers that use flash in their devices.
Roughly half of SanDisk's revenue now comes from the mobile
Shares of Milpitas, California-based SanDisk closed up 88
cents at $49.02 on the Nasdaq.
(Reporting by Gabriel Madway; Editing by Tim Dobbyn and