SanDisk Jumps After Raising Full-Year Revenue Forecast

SanDisk Corp., a maker of flash memory for mobile devices, rose in extended trading yesterday after the company raised its forecast for full-year revenue and gave a projection for sales in the current quarter that was ahead of analysts’ estimates.

SanDisk may report sales this year of $5.95 billion to $6.05 billion, a “substantial increase,” on its previous estimate, Judy Bruner, chief financial officer said on a conference call with analysts. Revenue for the third quarter may reach $1.53 billion to $1.58 billion, Bruner said. Analysts had projected sales of $1.49 billion on average for that period, according to data compiled by Bloomberg.

The Milpitas, California-based company’s stock rose as much as 7.3 percent to $63.75 in late trading yesterday after slipping 0.1 percent to $59.44 at the close in New York. The shares have gained 37 percent this year, compared with a 28 percent advance by the Philadelphia Semiconductor Index.

SanDisk has curbed spending on improving factories and building new ones as the memory-chip industry scales back supply to stem price declines. The company has said it expects enough demand to keep prices healthy this year. 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.

Quality Products

“SanDisk’s costs are probably coming down and they’re selling into higher quality products,” said Kevin Cassidy, an analyst at Stifel Nicolaus & Co., who has a buy rating on the shares.

Adjusted gross margins are forecast to be 47 percent to 48 percent in the third quarter, as the company projects a continued weakening in the yen, Bruner also said.

“We are seeing strong demand for all key product lines and we expect supply-demand balance to be healthy,” Bruner said.

Second-quarter profit, excluding some items, was $299 million, or $1.21 a share, helped by sales and buoyed by prices of chips that remain high as producers limit output increases. Sales rose 43 percent to $1.48 billion, the company said in a statement. Analysts on average had estimated profit of 93 cents a share and revenue of $1.39 billion, according to data compiled by Bloomberg.

“These earnings are a surprise for sure,” said Cassidy. “SanDisk must’ve had better prices or put more products out.”

A gross margin of 46 percent in the period also bolstered earnings, said Cassidy, who estimated a margin of 42 percent for the second quarter.

Net income in the second quarter was $261.8 million, or $1.06 a share, compared with $13 million, or 5 cents a share, a year earlier.

Bruner at first-quarter results in April had forecast $5.6 billion to $5.75 billion in sales for the year.

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