SanDisk Corporation To Post Results On Disappointing Sales

SanDisk Corp.

is expected to post fourth-quarter earnings Wednesday soon after issuing a warning of weaker than expected sales. http://investor.sandisk.com/phoenix.zhtml?c=86495&p=irol-newsArticle&ID=2006762 SanDisk fell about 19 percent on the warning last week and have shown little recovery. The shares changed hands recently at $79.61, up $0.81. Needham's Rajvindra S. Gill last week cut his rating on SanDisk to Hold from Buy and called its narrowing profit margin "particularly disappointing." But Deutsche Bank's Sidney Ho called the recent sell-off "overdone" and reiterated a Buy rating. Gill said Samsung may be pulling ahead of SanDisk in key area of product development, while the legal troubles of a supplier could present a long-term risk. That issue concerns a temporary injunction against the sale of chips used in certain data storage products sold by SanDisk, as reported by The Wall Street Journal. http://www.wsj.com/articles/court-order-bars-sales-of-some-chips-used-by-sandisk-ibm-1421114681 Gill said SanDisk has estimated annual sales of the affected products could hit $500 million "in the next several years." Disappointing sales of retail products and iNAND embedded flash drives will result in fourth-quarter revenue about 5 percent below SanDisk's earlier forecast, the company said last week. Adjusted gross margin of about 45 percent will be below the company's previous forecast of between 47 percent and 49 percent. Gill expects Sandisk will beat "conservative guidance for 2015 amid strong demand from expanding smartphone chip content and limited supply growth Analysts now expect earnings of $1.27 a share on revenue of $1.73 billion, in line with the company's recent announcement.