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SanDisk in damage control mode

by on16 April 2015

Revenue falls

SanDisk went into damage control mode after predicting a steeper-than-expected fall in full-year revenue.

The outfit said it plans to cut jobs to reduce costs, as the data storage products maker struggles to meet demand for its flash-based memory products.

The company plans to reduce its non-factory headcount by about 5 percent to cut costs, it said on a conference call. SanDisk had 8,696 full-time employees as of December 28.

 The revenue decline is its first after two years, came after the company reported its first fall in quarterly revenue, also in two years.

Shares of SanDisk, which makes products for cloud computing and datacentres as well as for smartphones and other mobile devices, fell 6 percent in extended trading.

What went wrong?

The weird thing is that life should be great -- there is strong demand for SanDisk's solid-state drives and memory chips.

However it appears lower pricing, lean inventory, unplanned maintenance at its chip foundry last year and delay in sales of certain embedded parts has led to two revenue forecast cuts this year. The company had said in January it had lost a major customer, widely believed to be Apple, which switched to using solid state drives made by Samsung in its MacBooks.

Numbers of doom

SanDisk's revenue forecast for the current quarter was well below analysts' average estimate and its full-year revenue forecast of $5.4-$5.7 billion also fell short of expectation of $6.15 billion.

SanDisk's revenue fell nearly 12 percent in the first quarter ended March 29 to $1.33 billion, slightly above analysts' average estimate of $1.31 billion.

Net income fell nearly 86 percent to $39.0 million.

The stock has lost just over a quarter of its value this year, which analysts say makes SanDisk an attractive target for companies looking to boost their presence in the enterprise market.

Last modified on 16 April 2015
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