(Adds outlook, CFO comment, gross margin estimates)
By Noel Randewich
SAN FRANCISCO Jan 22 SanDisk Corp
posted higher fourth-quarter profits but gave a revenue outlook
that fell short of some analysts' expectations and said memory
chip prices would fall more this year than in 2013.
The stock rose modestly after the results were released, but
turned lower after Chief Financial Officer Judy Bruner warned
about weaker chip prices during a conference call with analysts.
"There was probably, at least for parts of last year, a
little bit more undersupply, meaning that prices were a little
bit firmer," Bruner said in an interview. "In a balanced
environment, we expect that there would be a little more price
decline in the industry in '14 relative to '13."
She said she expects average selling prices for SanDisk's
chips to decline less than its rivals' chips because SanDisk is
shifting toward more value-added products.
SanDisk, which sells NAND chips to device makers of
smartphones, cameras and other mobile devices, is increasingly
selling its own branded solid-state drives, made with its chips,
directly to companies and consumers.
While they remain significantly more expensive than
mechanical hard drives, solid-state drives, or SSDs, are gaining
popularity in data centers and consumer laptops due to their
"SSDs are becoming a bigger proportion of the company, which
means less volatility in earnings," said Pacific Crest analyst
Monika Garg. "They're moving up the value chain."
Riding an industry recovery in NAND prices, SanDisk's shares
have surged 50 percent in the past year, compared to a 24
percent increase in the Standard & Poor's 500 index.
The Milpitas, California-based company posted fourth-quarter
revenue of $1.73 billion, up 12 percent from the year-ago
quarter. Analysts on average had expected $1.703 billion,
according to Thomson Reuters I/B/E/S.
SanDisk expects revenue of $1.45 billion to $1.52 billion
for the first quarter, and $6.4 billion to $6.8 billion for the
full year, she said.
Net income in the fourth quarter rose to $338 million, or
$1.45 per share, from $214 million, or 87 cents per share, a
Excluding one-time items, earnings were $1.71 per share.
That was better than the $1.58 expected by analysts.
It estimated non-GAAP gross margins of 47 to 49 percent in
the first quarter, and 45 to 48 percent for all of 2014.
Analysts expected gross margins of 48 percent for the first
quarter and 47 percent for 2014.
Shares of SanDisk were down 0.66 percent in extended trade
after closing up 0.42 percent at $72.19 on Nasdaq.
(Reporting by Noel Randewich; Editing by Richard Chang)