SanDisk Declines Most Since January on Lower Sales Forecast

SanDisk Corp. (SNDK), the biggest maker of flash-memory cards, fell the most in two months after cutting its forecast for first-quarter sales and profitability, citing weaker-than-expected pricing and demand for components that store data in mobile phones.

The stock declined 11 percent to $44.51 at the close in New York after the company’s forecast yesterday, its biggest decline since Jan. 26. The Milpitas, California-based company’s shares are down 9.6 percent this year.

SanDisk and its competitors are pumping out more electronics components than the consumer-electronics industry needs, according to Daniel Berenbaum, an analyst at MKM Partners LLC in New York.

“Demand is OK, but there’s an awful lot of supply out there,” said Berenbaum, who has a neutral rating on SanDisk. “It’s a supply-driven business.”

Revenue in the quarter that ended April 1 will be about $1.2 billion, compared with an earlier forecast for $1.3 billion to $1.35 billion, SanDisk said in a statement. Gross margin, a yardstick of profitability, will be below 39 percent to 42 percent, the company’s previous prediction, said SanDisk, which also makes the chips that go into flash-memory cards.

Under Chief Executive Officer Sanjay Mehrotra, SanDisk has been trying to win more chip sales from makers of mobile phones and lessen its reliance on revenue from memory cards, such as those used in digital cameras.

Photographer: Jacob Kepler/Bloomberg

SanDisk Corp. compact flash (CF) and secure digital (SD) cards are arranged for a photo during the 2011 International Consumer Electronics Show (CES) in Las Vegas. Close

SanDisk Corp. compact flash (CF) and secure digital (SD) cards are arranged for a photo... Read More

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Photographer: Jacob Kepler/Bloomberg

SanDisk Corp. compact flash (CF) and secure digital (SD) cards are arranged for a photo during the 2011 International Consumer Electronics Show (CES) in Las Vegas.

Gross margin measures the percentage of sales remaining after deducting the cost of production.

Separately, Micron Technology Inc. (MU), which competes with SanDisk in so-called flash memory, fell 4.1 percent to $7.66. The Boise, Idaho-based company, which reported a third consecutive quarterly loss last month, is up 22 percent this year on speculation it will benefit from industry consolation.

The 30-member Philadelphia Semiconductor Index, which includes SanDisk and Micron, dropped 2.2 percent.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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