* Third-quarter adj EPS $0.48 vs est $0.33
* Third-quarter revenue $1.27 bln vs est $1.22 bln
* Gross margin rises to 30.1 pct from 27.2 pct in second
* Sees fourth-quarter revenue $1.5 bln, plus or minus $50
mln, vs est $1.50 bln
* Sees fourth-quarter adj gross margin 31 pct to 35 pct
Oct 18 SanDisk Corp's quarterly results
topped expectations as rising demand for chips used in
smartphones and tablets and a limited supply drove up prices for
flash memory, a trend that the chipmaker expects will continue.
The surprisingly strong margin outlook from the company and
current-quarter revenue forecast of $1.5 billion, plus or minus
$50 million, drove shares up 4 percent after market.
A rise in smartphone and tablet sales and higher adoption of
solid state drives will propel demand for flash memory, Chief
Executive Sanjay Mehrotra said on a conference call with
Chipmakers including SanDisk, Micron Technology Inc
, Elpida Memory Inc, SK Hynix,
Samsung Electronics Co Ltd and Toshiba Corp
ramped up NAND production for smartphones and tablets, but the
subsequent supply glut drove prices down as much as 60 percent
earlier this year.
However, NAND prices have recovered in the last one month.
Prices for 64 GB memory modules have risen about 17 percent,
while 32 GB chips have gained 7 percent this month.
Toshiba's planned production cut has also helped firm up
prices, but analysts say the full impact of the lower output is
yet to be felt.
"We look to a very favorable pricing environment next year,
because we expect that there is a strong supply-demand
environment in the industry next year, and that the product mix
will also give us a further improvement ...," Chief Financial
Officer Judy Bruner said on the call.
A teardown of Apple Inc's iPhone 5 revealed that
SanDisk was one of the suppliers for the smartphone. Supplies to
Apple will add to sales in the current quarter, but Apple's
reputation as a hard bargainer had left analysts worried about
the Milpitas, California-based company's margins.
While SanDisk's third-quarter margins fell to 30.1 percent,
it expects gross margins be around 31 percent to 35 percent in
the current quarter.
For the three-month period ended Sept 30. SanDisk earned $77
million, or 31 cents per share, on revenue of $1.27 billion.
Excluding items, it earned 48 cents per share.
Analysts on average were expecting a profit of 33 cents per
share on revenue of $1.22 billion, according to Thomson Reuters
"We were largely expecting recovery on NAND pricing, we have
seen pretty good NAND results, even from Intel, and it's just
one of the areas of strength left in the semiconductor market,"
RBC Capital Markets analyst Doug Freedman said.
The company's shares were trading up about 4 percent after
the bell. They closed at $42.86 on Thursday on the Nasdaq.