SanDisk Corporation (NASDAQ:SNDK), the global leader in flash memory cards, announced results for the first fiscal quarter ending April 3, 2011. Total first quarter revenue of $1.29 billion increased 19% on a year-over-year basis and decreased 3% on a sequential basis. First quarter net income, in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $224 million, or $0.92 per diluted share, compared to net income of $235 million, or $0.99 per diluted share in the first quarter of fiscal 2010 and $485 million, or $2.01 per diluted share, in the fourth quarter of fiscal 2010.
On a non-GAAP basis, which excludes the impact of share-based compensation expense, amortization of acquisition-related intangible assets, non-cash economic interest expense associated with the convertible debt and related tax adjustments, first-quarter net income was $251 million, or $1.03 per diluted share, compared to net income of $225 million, or $0.95 per diluted share, in the first quarter of fiscal 2010 and net income of $307 million, or $1.27 per diluted share, in the fourth quarter of fiscal 2010. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.
"Our embedded mobile business drove growth in the first quarter, and SanDisk executed well to deliver strong business results," said Sanjay Mehrotra, President and CEO. "We have been actively managing our supply chain following the recent events in Japan and believe we remain on track to deliver a strong 2011 for SanDisk."
FIRST QUARTER 2011 KEY FINANCIAL METRICS
Total first quarter revenue was $1.29 billion, up 19% year-over-year and down 3% sequentially.
Total first quarter gross profit, product gross profit and operating income compared on a year-over-year and sequential basis are shown in the table below:
Metric
Metric in millions of US$, except % GAAP Non - GAAP
Q111 Q110 Q410 Q111 Q110 Q410
Total gross profit
% of total revenue $552
42.6% $500
46.0% $576
43.4% $558
43.1% $506
46.5% $580
43.7%
Product gross profit
% of product revenue $468
38.6% $407
40.9% $490
39.5% $474
39.1% $412
41.5% $494
39.8%
Operating income
% of total revenue $349
27.0% $314
28.9% $357
26.9% $369
28.5% $334
30.8% $385
29.0%
Cash flow from operations in the first quarter was $399 million and free cash flow was $121 million.
Total cash and cash equivalents and short and long-term marketable securities at the end of the first quarter of fiscal 2011 was $5.51 billion compared to $3.30 billion at the end of the first quarter of fiscal 2010 and $5.34 billion at the end of the fourth quarter of fiscal 2010.
OTHER HIGHLIGHTS
SanDisk announced its 19-nanometer technology node, the industry's most advanced process technology for NAND flash memory. The new manufacturing technology will produce the smallest NAND flash memory chips in the world, enabling SanDisk to deliver embedded and removable storage devices with the high capacities and small form factors used in mobile phones, tablets and other devices.
SanDisk announced its next generation of iNAND™ and iNAND Ultra™ embedded flash drives (EFDs) supporting the eMMC interface. Available in capacities up to 64 gigabytes (GB) of storage in a 12mm x 16mm JEDEC standard package, iNAND products enable slimmer and more compact smartphone and tablet designs. SanDisk also offers an integrated solid state drive (iSSD), the world's smallest 64 gigabytes SSD in a BGA (Ball Grid Array) package supporting the SATA interface.
SanDisk, through its HQME™ (High Quality Mobile Experience™) initiative, along with other leading companies from throughout the mobile ecosystem, launched a proposed industry standardization effort aimed at addressing the current and growing challenges of efficiently managing and delivering data from mobile networks to mobile devices. This initiative leverages local storage and intelligent content caching designed to relieve network congestion and accelerate data delivery to the mobile device.
CONFERENCE CALL
SanDisk's first quarter of fiscal 2011 conference call is scheduled for 2:00 P.M., Pacific Time, Thursday, April 21, 2011. The conference call will be webcast and can be accessed live, and throughout the quarter, at SanDisk's website at www.sandisk.com/IR. To participate in the call via telephone, the dial-in number is 719-325-4865 and the dial-in password is 9890786. A copy of this press release will be furnished to the Securities and Exchange Commission on a current report on Form 8-K and will be posted to our website prior to the conference call.
SCHEDULED INTERVIEW
SanDisk Corporation President and CEO, Sanjay Mehrotra, is scheduled to appear on CNBC's "Closing Bell with Maria Bartiromo," on Thursday, April 21, 2011, at approximately 1:15 P.M., Pacific Time.
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking statements, including statements about our business prospects and outlook in fiscal 2011, our actions to mitigate the impact of the recent earthquake and related nuclear accident in Japan, the expected benefits of our next-generation iNAND Ultra and HQME products, and our expectations regarding our business, that are based on our current expectations and are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate and may significantly harm our business, financial condition and results of operations. Risks that may cause these forward-looking statements to be inaccurate include among others:
negative effects of the Japan earthquake and related nuclear accident on us, our suppliers, our OEM and retail customers, and suppliers of other components to our OEM customers;
competitive pricing pressures, resulting in lower average selling prices and lower or negative product gross margins;
unpredictable or changing demand for our products, particularly for certain form factors, such as embedded flash memory, or capacities, or the mix of X2 and X3;
insufficient supply from captive flash memory sources, inability to obtain non-captive flash memory supply of the right product mix with adequate margins and quality in the time frame necessary to meet demand, or inability to realize a positive margin on non-captive purchases;
expansion of industry supply, including low grade supply useable in limited markets, creating excess market supply, causing our average selling prices to decline faster than our costs;
excess captive memory output or capacity which could result in write-downs for excess inventory, lower of cost or market charges, fixed costs associated with under-utilized capacity, or other consequences;
increased memory component and other costs as a result of currency exchange rate fluctuations to the U.S. dollar, particularly with respect to the Japanese yen;
lower than anticipated demand, including due to general economic weakness in our markets; and
the other risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our Annual Report on Form 10-K for the fiscal year ended January 2, 2011. SanDisk Corporation (NASDAQ:SNDK), the global leader in flash memory cards, today announced results for the first fiscal quarter ending April 3, 2011. Total first quarter revenue of $1.29 billion increased 19% on a year-over-year basis and decreased 3% on a sequential basis. First quarter net income, in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $224 million, or $0.92 per diluted share, compared to net income of $235 million, or $0.99 per diluted share in the first quarter of fiscal 2010 and $485 million, or $2.01 per diluted share, in the fourth quarter of fiscal 2010.
On a non-GAAP basis, which excludes the impact of share-based compensation expense, amortization of acquisition-related intangible assets, non-cash economic interest expense associated with the convertible debt and related tax adjustments, first-quarter net income was $251 million, or $1.03 per diluted share, compared to net income of $225 million, or $0.95 per diluted share, in the first quarter of fiscal 2010 and net income of $307 million, or $1.27 per diluted share, in the fourth quarter of fiscal 2010. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.
"Our embedded mobile business drove growth in the first quarter, and SanDisk executed well to deliver strong business results," said Sanjay Mehrotra, President and CEO. "We have been actively managing our supply chain following the recent events in Japan and believe we remain on track to deliver a strong 2011 for SanDisk."
FIRST QUARTER 2011 KEY FINANCIAL METRICS
Total first quarter revenue was $1.29 billion, up 19% year-over-year and down 3% sequentially.
Total first quarter gross profit, product gross profit and operating income compared on a year-over-year and sequential basis are shown in the table below:
Metric
Metric in millions of US$, except % GAAP Non - GAAP
Q111 Q110 Q410 Q111 Q110 Q410
Total gross profit
% of total revenue $552
42.6% $500
46.0% $576
43.4% $558
43.1% $506
46.5% $580
43.7%
Product gross profit
% of product revenue $468
38.6% $407
40.9% $490
39.5% $474
39.1% $412
41.5% $494
39.8%
Operating income
% of total revenue $349
27.0% $314
28.9% $357
26.9% $369
28.5% $334
30.8% $385
29.0%
Cash flow from operations in the first quarter was $399 million and free cash flow was $121 million.
Total cash and cash equivalents and short and long-term marketable securities at the end of the first quarter of fiscal 2011 was $5.51 billion compared to $3.30 billion at the end of the first quarter of fiscal 2010 and $5.34 billion at the end of the fourth quarter of fiscal 2010.
OTHER HIGHLIGHTS
SanDisk announced its 19-nanometer technology node, the industry's most advanced process technology for NAND flash memory. The new manufacturing technology will produce the smallest NAND flash memory chips in the world, enabling SanDisk to deliver embedded and removable storage devices with the high capacities and small form factors used in mobile phones, tablets and other devices.
SanDisk announced its next generation of iNAND™ and iNAND Ultra™ embedded flash drives (EFDs) supporting the eMMC interface. Available in capacities up to 64 gigabytes (GB) of storage in a 12mm x 16mm JEDEC standard package, iNAND products enable slimmer and more compact smartphone and tablet designs. SanDisk also offers an integrated solid state drive (iSSD), the world's smallest 64 gigabytes SSD in a BGA (Ball Grid Array) package supporting the SATA interface.
SanDisk, through its HQME™ (High Quality Mobile Experience™) initiative, along with other leading companies from throughout the mobile ecosystem, launched a proposed industry standardization effort aimed at addressing the current and growing challenges of efficiently managing and delivering data from mobile networks to mobile devices. This initiative leverages local storage and intelligent content caching designed to relieve network congestion and accelerate data delivery to the mobile device.
CONFERENCE CALL
SanDisk's first quarter of fiscal 2011 conference call is scheduled for 2:00 P.M., Pacific Time, Thursday, April 21, 2011. The conference call will be webcast and can be accessed live, and throughout the quarter, at SanDisk's website at www.sandisk.com/IR. To participate in the call via telephone, the dial-in number is 719-325-4865 and the dial-in password is 9890786. A copy of this press release will be furnished to the Securities and Exchange Commission on a current report on Form 8-K and will be posted to our website prior to the conference call.
SCHEDULED INTERVIEW
SanDisk Corporation President and CEO, Sanjay Mehrotra, is scheduled to appear on CNBC's "Closing Bell with Maria Bartiromo," on Thursday, April 21, 2011, at approximately 1:15 P.M., Pacific Time.
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking statements, including statements about our business prospects and outlook in fiscal 2011, our actions to mitigate the impact of the recent earthquake and related nuclear accident in Japan, the expected benefits of our next-generation iNAND Ultra and HQME products, and our expectations regarding our business, that are based on our current expectations and are subject to numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate and may significantly harm our business, financial condition and results of operations. Risks that may cause these forward-looking statements to be inaccurate include among others:
negative effects of the Japan earthquake and related nuclear accident on us, our suppliers, our OEM and retail customers, and suppliers of other components to our OEM customers;
competitive pricing pressures, resulting in lower average selling prices and lower or negative product gross margins;
unpredictable or changing demand for our products, particularly for certain form factors, such as embedded flash memory, or capacities, or the mix of X2 and X3;
insufficient supply from captive flash memory sources, inability to obtain non-captive flash memory supply of the right product mix with adequate margins and quality in the time frame necessary to meet demand, or inability to realize a positive margin on non-captive purchases;
expansion of industry supply, including low grade supply useable in limited markets, creating excess market supply, causing our average selling prices to decline faster than our costs;
excess captive memory output or capacity which could result in write-downs for excess inventory, lower of cost or market charges, fixed costs associated with under-utilized capacity, or other consequences;
increased memory component and other costs as a result of currency exchange rate fluctuations to the U.S. dollar, particularly with respect to the Japanese yen;
lower than anticipated demand, including due to general economic weakness in our markets; and
the other risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our Annual Report on Form 10-K for the fiscal year ended January 2, 2011.
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