SANDISK ANNOUNCES THIRD QUARTER FINANCIAL RESULTS
Taking Measures To Further Strengthen Balance Sheet and Reduce Expenses
Milpitas, CA, - SanDisk® Corporation (NASDAQ:SNDK), the world’s largest supplier of flash storage card products, announced results for the third quarter ended September 28, 2008, a non-binding MOU to restructure joint venture operations with Toshiba, a significant reduction in planned capital expenditures for 2009 and actions to reduce operating expenses. Total third-quarter revenue was $821 million, a decrease of 21% on a year-over-year basis. Net loss in accordance with U.S. Generally Accepted Accounting Principles (GAAP) was ($155) million, or ($0.69) per diluted share, compared to GAAP net income of $85 million, or $0.36 per diluted share, in the third quarter of 2007.
Excluding the impact of acquisition-related charges, share-based compensation expense and the related tax effect, the third quarter non-GAAP net loss was ($132) million, or ($0.59) per diluted share, compared to the third quarter 2007 non-GAAP net income of $130 million, or $0.54 per diluted share.
SanDisk also announced today the signing of a non-binding memorandum of understanding with Toshiba to restructure the current Fab 3 and Fab 4 joint ventures, which would substantially reduce SanDisk’s capital commitments in 2009, strengthen its balance sheet, and provide flexibility in managing supply.
“While third quarter revenue was down year-over-year, record megabyte sales demonstrate the resiliency and breadth of our channels and the elasticity of our end markets in the face of deteriorating global macroeconomic conditions. However, excess inventories resulted in severe pricing pressures and a disappointing loss for the quarter including $109 million of inventory related charges.” said Eli Harari, Chairman and CEO. “To further strengthen our balance sheet we are taking decisive actions including: restructuring of our Fab joint ventures, deep cuts to our 2009 fab capacity investments, and substantial expense reduction measures for 2009. We believe the industry-wide moves to curtail flash capacity expansions are sowing the seeds for the next recovery. Times are tough, however, we believe we can maintain our strong market position with our intellectual property, our industry lead in manufacturing 3-bits per cell Flash, our strong execution of the 43-nanometer technology transition, our diversified OEM and retail global sales channels and our strong balance sheet.”
Key Metrics for Third Quarter of 2008.
Total megabytes sold in the third quarter increased 105% year-over-year and 44% from the second quarter of 2008.
Average price per megabyte sold declined 63% on a year-over-year basis and 30% sequentially.
License and royalty revenue was $132 million, up 11% year-over-year.
Average retail card capacity of 2.9 gigabytes increased 84% on a year-over-year basis and 23% sequentially.
GAAP product gross profit (loss) was ($138) million, or (20.0%) compared to $224 million, or 24.3% in the third quarter of 2007. Non‑GAAP product gross profit (loss) was ($121) million, or (17.5%) compared to $242 million, or 26.4% in the third quarter of 2007.
Operating loss, on a GAAP basis, was ($250) million, or (31%) of total revenue compared to GAAP operating income of $109 million, or 11% of total revenue in the third quarter of 2007. Non-GAAP operating loss was ($205) million, or (25%) of total revenue, compared to operating income of $162 million, or 16% of total revenue, in the third quarter of 2007.
SanDisk introduced 16GB* microSDHC™ and Memory Stick Micro™ (M2™) mobile memory cards - the world’s largest removable storage capacity for mobile phones.
SanDisk announced slotMusic™. These microSD™ cards will be made available with pre-loaded high fidelity DRM free MP3 music from top artists at EMI Music, SONY BMG, Universal Music Group, and Warner Music Group. A selection of slotMusic cards will be available during the holidays at brick-and-mortar and online stores including Best Buy and Wal-Mart.
SanDisk announced product upgrades including a 50 percent speed increase for the SDHC™ Extreme III card and a new high speed 45 megabytes per second** 16-gigabyte CompactFlash® Extreme IV card.
SanDisk and Toshiba also announced today a non-binding memo of understanding to sell approximately 30% of the manufacturing capacity of the parties’ joint ventures to Toshiba
Milpitas, CA, - SanDisk® Corporation (NASDAQ:SNDK), the world’s largest supplier of flash storage card products, announced results for the third quarter ended September 28, 2008, a non-binding MOU to restructure joint venture operations with Toshiba, a significant reduction in planned capital expenditures for 2009 and actions to reduce operating expenses. Total third-quarter revenue was $821 million, a decrease of 21% on a year-over-year basis. Net loss in accordance with U.S. Generally Accepted Accounting Principles (GAAP) was ($155) million, or ($0.69) per diluted share, compared to GAAP net income of $85 million, or $0.36 per diluted share, in the third quarter of 2007.
Excluding the impact of acquisition-related charges, share-based compensation expense and the related tax effect, the third quarter non-GAAP net loss was ($132) million, or ($0.59) per diluted share, compared to the third quarter 2007 non-GAAP net income of $130 million, or $0.54 per diluted share.
SanDisk also announced today the signing of a non-binding memorandum of understanding with Toshiba to restructure the current Fab 3 and Fab 4 joint ventures, which would substantially reduce SanDisk’s capital commitments in 2009, strengthen its balance sheet, and provide flexibility in managing supply.
“While third quarter revenue was down year-over-year, record megabyte sales demonstrate the resiliency and breadth of our channels and the elasticity of our end markets in the face of deteriorating global macroeconomic conditions. However, excess inventories resulted in severe pricing pressures and a disappointing loss for the quarter including $109 million of inventory related charges.” said Eli Harari, Chairman and CEO. “To further strengthen our balance sheet we are taking decisive actions including: restructuring of our Fab joint ventures, deep cuts to our 2009 fab capacity investments, and substantial expense reduction measures for 2009. We believe the industry-wide moves to curtail flash capacity expansions are sowing the seeds for the next recovery. Times are tough, however, we believe we can maintain our strong market position with our intellectual property, our industry lead in manufacturing 3-bits per cell Flash, our strong execution of the 43-nanometer technology transition, our diversified OEM and retail global sales channels and our strong balance sheet.”
Key Metrics for Third Quarter of 2008.
Total megabytes sold in the third quarter increased 105% year-over-year and 44% from the second quarter of 2008.
Average price per megabyte sold declined 63% on a year-over-year basis and 30% sequentially.
License and royalty revenue was $132 million, up 11% year-over-year.
Average retail card capacity of 2.9 gigabytes increased 84% on a year-over-year basis and 23% sequentially.
GAAP product gross profit (loss) was ($138) million, or (20.0%) compared to $224 million, or 24.3% in the third quarter of 2007. Non‑GAAP product gross profit (loss) was ($121) million, or (17.5%) compared to $242 million, or 26.4% in the third quarter of 2007.
Operating loss, on a GAAP basis, was ($250) million, or (31%) of total revenue compared to GAAP operating income of $109 million, or 11% of total revenue in the third quarter of 2007. Non-GAAP operating loss was ($205) million, or (25%) of total revenue, compared to operating income of $162 million, or 16% of total revenue, in the third quarter of 2007.
SanDisk introduced 16GB* microSDHC™ and Memory Stick Micro™ (M2™) mobile memory cards - the world’s largest removable storage capacity for mobile phones.
SanDisk announced slotMusic™. These microSD™ cards will be made available with pre-loaded high fidelity DRM free MP3 music from top artists at EMI Music, SONY BMG, Universal Music Group, and Warner Music Group. A selection of slotMusic cards will be available during the holidays at brick-and-mortar and online stores including Best Buy and Wal-Mart.
SanDisk announced product upgrades including a 50 percent speed increase for the SDHC™ Extreme III card and a new high speed 45 megabytes per second** 16-gigabyte CompactFlash® Extreme IV card.
SanDisk and Toshiba also announced today a non-binding memo of understanding to sell approximately 30% of the manufacturing capacity of the parties’ joint ventures to Toshiba
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