Jul 22, 2009
Reports positive operating margin and EPS
Milpitas, CA, July 22, 2009 - SanDiskCorporation (NASDAQ:SNDK), the global leader in flash memory cards, today announced results for the second quarter ended June 28, 2009. Total second quarter revenue of $731 million declined 10% on a year-over-year basis and increased 11% on a sequential basis. Net income, in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $53 million, or $0.23 per diluted share, compared to GAAP net loss of ($74) million or ($0.33) per share in the second quarter of 2008 and GAAP net loss of ($208) million, or ($0.92) per share in the first quarter of 2009.
On a non-GAAP basis, which excludes the impact of acquisition-related charges, share-based compensation expense, and economic non-cash interest expense associated with the cash-settled convertible note, the second-quarter net income was $83 million, or $0.36 per diluted share, compared to a net loss of ($22) million or ($0.10) per share in the second quarter of 2008 and net loss of ($108) million or ($0.48) per share in the first quarter of 2009. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.
"We are very pleased with our return to profitability in the second quarter, driven by increased pricing, higher royalty revenue, and strong execution. Our decisive and timely restructuring actions are delivering the intended results," said Eli Harari, Chairman and CEO, SanDisk. "In the second quarter we renewed our patent cross license agreement with Samsung Electronics, providing market certainty. We remain cautiously optimistic about the second half of 2009."
SECOND QUARTER 2009 METRICS & HIGHLIGHTS
- Total cash and equivalents, short and long-term investments at the end of the second quarter was $2.34 billion compared to $2.54 billion at the end of the second quarter of 2008 and $2.38 billion at the end of the first quarter of 2009.
- Product revenue was $610 million, down 11% year-over-year and up 4% sequentially.
- License and royalty revenue of $120 million, was down 7% year-over-year and up 68% sequentially.
- Gigabytes sold increased 118% year-over-year and decreased 7% sequentially.
- Average price per gigabyte sold declined 59% year-over-year and increased 12% sequentially.
- Average retail card capacity was 4.27 gigabytes, an increase of 81% on a year-over-year basis and a decrease of 2% sequentially.
- GAAP product gross profit was $129 million compared to GAAP product gross profit of $22 million in the second quarter of 2008 and GAAP product gross loss of ($73) million in the first quarter of 2009.
- Non-GAAP product gross profit was $134 million, compared to non-GAAP product gross profit of $39 million in the second quarter of 2008 and non-GAAP product loss of ($67) million in the first quarter of 2009. Second quarter product gross profit included an $87 million benefit primarily from the sale of previously reserved inventory.
- GAAP operating profit was $68 million compared to GAAP operating loss of ($101) million in the second quarter of 2008 and GAAP operating loss of ($165) million in the first quarter of 2009.
- Non-GAAP operating profit was $94 million compared to non-GAAP operating loss of ($57) million in the second quarter of 2008 and non-GAAP operating loss of ($146) million in the first quarter of 2009.
OTHER RECENT KEY ANNOUNCEMENTS
- SanDisk and Samsung Electronics Co., Ltd. ("Samsung") renewed the cross license agreement of their semiconductor patent portfolios for another seven years. In addition, the companies signed a flash memory supply agreement under which Samsung will continue to make available to SanDisk a guaranteed portion of its flash memory production output.
- SanDisk introduced the world's fastest 32-gigabyte 1 SanDisk Extreme® SDHC™ card, with read and write speeds at up to 30 megabytes per second 2, for photography and video enthusiasts.
- SanDisk began shipping its next-generation flash memory-based modular solid state drives (SSD), SanDisk® pSSD™ P2 and S2, featuring nCache™, a new technology designed to improve netbook performance, at a competitive price.
SanDisk Corporation Chairman and Chief Executive Officer, Eli Harari, is scheduled to appear on CNBC's "Closing Bell with Maria Bartiromo," on July 22, 2009, at approximately 1:15 P.M., PDT.
SanDisk's second quarter 2009 conference call is scheduled for 2:00 P.M., PDT, Wednesday, July 22, 2009. The conference call will be webcast and can be accessed live, and throughout the quarter, at SanDisk's website at /IR. To participate in the call via telephone, the dial-in number is 913-312-0690. The dial-in password is 2247552. A copy of this press release will be furnished to the Securities and Exchange Commission on a current report on Form 8-K and will be posted to our website prior to the conference call.
A complete reconciliation between GAAP and non-GAAP information referred to in this release is provided in the attached tables.
FORWARD LOOKING STATEMENTS
This news release contains certain forward-looking statements, including statements about our business prospects and outlook, the benefits from the restructuring of our joint ventures and other restructuring actions that we have taken, the expected benefits from the renewal of the Samsung cross license agreement, our expectations for the second half of 2009, and our expectations regarding our business, that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate and may significantly and adversely affect our business, financial condition and results of operations. Risks that may cause these forward-looking statements to be inaccurate include among others:
- slower than expected, or no, growth in market demand for our products including, for example, our solid state drives, or a slower adoption rate for our products in current and new markets that we are targeting including, for example, the mobile phone market,
- reduced demand or consumer confidence due to the continuing global economic downturn,
- over-supply in the markets that we serve,
- declines in average selling prices,
- any interruption of or delay in supply from any of the semiconductor manufacturing or subcontracting facilities, including test and assembly facilities that supply products to us,
- slower than expected expansion of our global sales channels,
- fluctuations in operating results, unexpected yield variances and delays related to our conversion to smaller geometries of NAND flash technology,
- increased memory component and other costs as a result of currency exchange rate fluctuations to the U.S. dollar, particularly with respect to the Japanese yen,
- the failure of our licensees to abide by contractual terms,
- business interruption due to earthquakes, hurricanes or other natural disasters, particularly in areas in the Pacific Rim and Japan where we manufacture and assemble products,
- adverse results in litigation or regulatory actions affecting us, and
- other risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our Annual Report on Form 10-K/A for the fiscal year ended December 28, 2008 and Quarterly Report on Form 10-Q for the first quarter ended March 29, 2009.
Future results may differ materially from those previously reported. We do not intend to update the information contained in this release.
SanDisk Corporation, the inventor and world's largest supplier of flash storage cards, is a global leader in flash memory - from research, manufacturing and product design to consumer branding and retail distribution. SanDisk's product portfolio includes flash memory cards for mobile phones, digital cameras and camcorders, digital audio/video players, USB flash drives for consumers and the enterprise, embedded memory for mobile devices, and solid state drives for computers. SanDisk (www.sandisk.com/corporate) is a Silicon Valley-based S&P 500 company with more than half its sales outside the United States
SanDisk, the SanDisk logo and SanDisk Extreme are trademarks of SanDisk Corporation, registered in the United States and other countries. nCache and SanDisk pSSD are trademarks of SanDisk Corporation. SDHC is a trademark of SD-3C LLC. Other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).
1 1 gigabyte (GB) = 1 billion bytes. Some capacity not available for data storage.
2 Based on SanDisk internal testing; performance may vary depending upon host device.
SanDisk Supporting Documents (.pdf)