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SanDisk: Fiscal 2Q11 Financial Results

Best quarterly revenue in company's history: $2.7 billion

This is a Press Release edited by StorageNewsletter.com on July 22, 2011 at 3:04 pm
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(in US$ millions) 2Q10 2Q11  6 mo. 10   6 mo. 11
 Revenues 1,179 1,375 2,266  2,669
 Growth   17%   18%
 Net income (loss)  257.9 248.4 492.6 472.5

SanDisk Corporation announced results for the second fiscal quarter ending July 3, 2011.

Total second quarter revenue of $1.375 billion increased 17% on a year-over-year basis and increased 6% on a sequential basis. Second quarter net income, in accordance with U.S. GAAP, was $248 million, or $1.02 per diluted share, compared to net income of $258 million, or $1.08 per diluted share in the second quarter of fiscal 2010 and $224 million, or $0.92 per diluted share, in the first quarter of fiscal 2011.

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 debts and related tax adjustments, second-quarter net income was $278 million, or $1.14 per diluted share, compared to net income of $258 million, or $1.08 per diluted share, in the second quarter of fiscal 2010 and net income of $251 million, or $1.03 per diluted share, in the first quarter of fiscal 2011. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.

"We delivered record quarterly revenue, driven by our broad product offerings and our well diversified Retail and OEM channels," said Sanjay Mehrotra, President and CEO, SanDisk. "Solid execution on product cost reductions enabled strong profitability. Our integration of Pliant Technology is progressing well and we are excited by our business prospects in the enterprise storage segment."

2Q1 Financial Metrics

  • Total second quarter revenue was $1.375 billion, up 17% year-over-year and up 6% sequentially.
  • For this quarter total gross profit $613 million, product gross profit $520 million and operating income $379 million.41.3%
  • Cash flow from operations in the second quarter was $269 million and free cash flow was ($232) million.
  • Total cash and cash equivalents and short and long-term marketable securities at the end of the second quarter of fiscal 2011 was $5.28 billion compared to $3.72 billion at the end of the second quarter of fiscal 2010 and $5.51 billion at the end of the first quarter of fiscal 2011.

Other Highlights:

  • SanDisk, along with its manufacturing partner Toshiba, announced the opening of Fab 5, their third 300-millimeter joint venture wafer fab in Yokkaichi, Japan.
  • SanDisk completed the acquisition of Pliant Technology, Inc., developer of enterprise solid state drives. With the completion of the transaction, Pliant became SanDisk’s Enterprise Storage Solutions business.
  • SanDisk expanded its Lightning Enterprise Flash Drive family with six new 2.5-inch 6GB SAS (6 gigabits per second Serial Attached SCSI) models.
  • SanDisk augmented its embedded product line up with the announcement of the SanDisk iNAND Extreme embedded flash drives. Combined with the iNAND and iNAND Ultra products, the iNAND family of products now cover the needs of all mobile market segments, from feature phones to high-end tablets.

Comments

For this calendar quarter, revenues of SanDisk, in flash memories only, are superior to WD and a little less than Seagate, both of them about totally in HDDs.


Abstracts of the earnings call transcript:

Sanjay Mehrotra, president and CEO:
"The mobile market, which accounted for 57% of our business, grew 40% year-over-year, primarily due to a fix forward increase in iNAND revenue."

Judy Bruner, CFO:
"Our gigabytes sold grew 14% sequentially, while ASP per gigabyte declined a modest 7%. And on a year-over-year basis, gigabytes sold increased 72% and ASP per gigabyte declined 31%.
"The OEM mix of our business grew to 68% of product revenue, up from 66% in the first quarter. Our retail business increased 2% sequentially and 9% year-over-year, with growth coming primarily from emerging markets.
"Our OEM business increased 8% sequentially and 22% year-over-year, driven by our embedded mobile products for phones and tablets, as well as by solid state drives. Our license and royalty revenue grew sequentially and year-over-year to $93 million.
"Our forecasted total revenue for Q3, inclusive of license and royalty, is $1.375 billion to $1.425 billion. For the full year, we now expect total revenue of $5.6 billion to $5.7 billion, the high end of the $5.3 billion to $5.7 billion range we provided at the beginning of the year."

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