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SanDisk Falls on Concern Over Supply Growth Limits

April 18 (Bloomberg) -- SanDisk Corp., a maker of flash memory for mobile devices, fell the most in a year amid concern that plans to limit increases in chip supply will curb sales growth.

The shares slid 6.6 percent to $52.02 at the close in New York for the biggest decline since April 2012. SanDisk isn’t increasing spending on new plants and equipment and doesn’t expect enough output to meet all of the orders it receives this year, the Milpitas, California-based company said yesterday.

“When you look for upside from here, it’s hard to see where we are going,” said Wedbush Securities analyst Betsy Van Hees. She has an outperform rating on the shares. Chip prices probably won’t rise, limiting potential revenue gains for SanDisk, she said.

Second-quarter sales will be $1.35 billion to $1.4 billion, Chief Financial Officer Judy Bruner said on a conference call yesterday with analysts. For the year, sales will be $5.6 billion to $5.75 billion, Bruner said. That compares with average analyst projections of $1.34 billion for the quarter and $5.65 for 2013, according to data compiled by Bloomberg.

‘Healthy Supply’

SanDisk is limiting increases in output from its factories and expects enough demand to keep prices healthy this year, Chief Executive Officer Sanjay Mehrotra told analysts on the call. SanDisk, in a manufacturing partnership with Toshiba Corp., competes with Samsung Electronics Co. in the market for so-called Nand flash memory, chips that act as storage for data in phones, tablets and some personal computers.

“Nand flash supply is tight,” said Mehrotra. “We expect a healthy demand and supply balance and a favorable pricing environment in 2013.”

First-quarter profit excluding some items was $207 million, or 84 cents a share, on sales of $1.34 billion, SanDisk said in a statement. Analysts on average had estimated profit of 79 cents a share and revenue of $1.3 billion, according to data compiled by Bloomberg. The highest estimates were for profit of $1.03 a share and sales of $1.47 billion.

To contact the reporter 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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