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Tuesday, February 3, 2009

Sandisk 4Q:2008 results

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.

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