SanDisk Sales Forecasts Miss Estimates Amid Plan to Limit Supply

SanDisk Corp., a maker of flash memory for mobile devices, gave sales forecasts for the first quarter and 2013 that fell short of analysts’ estimates as the company limits supply to avoid an industry glut.

Revenue in the current period will be $1.23 billion to $1.3 billion, the company said yesterday on a conference call. That’s less than the average analyst projection of $1.37 billion, according to data compiled by Bloomberg. For the year, sales will be $5.3 billion to $5.6 billion, while analysts on average had estimated revenue of $6 billion.

Chief Executive Officer Sanjay Mehrotra said he’s willing to risk limiting sales growth this year by increasing his company’s output at a slower pace than the rest of the industry. SanDisk hasn’t yet decided if or when it will add new production, he said. Memory-industry profits have been hurt or wiped out in the past when companies have produced more chips than their customers needed.

“While our supply growth plan for 2013 may somewhat limit our annual revenue growth, we believe it paves the way for healthier business fundamentals for us,” Mehrotra said in prepared text published by the company.

SanDisk shares fell as low as $45.13 in extended trading following the company’s forecast. The stock began to drop in late trading after Apple Inc., one of SanDisk’s biggest customers, reported sales that missed estimates. SanDisk shares had earlier slipped less than 1 percent to $47.65 at yesterday’s close in New York.

Gross Margin

Excluding some costs, gross margin in the current period will be about 38 percent, SanDisk said. Gross margin, or the percentage of sales remaining after deducting costs of production, before certain items will be about 41 percent for 2013.

“As long as the supply of Nand flash is under control, prices are going to increase,” said Kevin Cassidy, an analyst at Stifel Nicolaus & Co.

Fourth-quarter profit excluding some items was $1.05 a share on sales of $1.54 billion, the Milpitas, California-based company said in a statement. Analysts on average had estimated profit of 75 cents and revenue of $1.53 billion, according to data compiled by Bloomberg.

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