While revenues exceeded expectations by nearly 100mm, product gross margins collapsed under the weight of the lousy pricing environment that persisted for most of 4Q:08. Guidance of 475-575mm is below the street’s prior expectation of 631mm. The company filed a mixed shelf of indeterminate size.
The Skew: The company is clearly worried about the current environment as they feel the need to raise cash with the stock here – bet that $27 bid from Samsung is looking pret-ty good right now. The NAND environment has been improving for the last month but Sandisk’s restructuring has me wondering how much negative impact there will be to gross margins as a result of reduced interest in their manufacturing ops. Sandisk is interesting at $9 but lack of clarity on the unwinding of the dubious JV manufacturing accounting structure should give pause.