SanDisk Corp Earnings: Fifth Straight Quarter of Shrinking Margins as Net Income Falls

Rising costs hurt S&P 500 (NYSE:SPY) component SanDisk Corporation (NASDAQ:SNDK) in the fourth quarter as profit dropped from a year earlier. SanDisk is a multinational corporation whose main focus is the design, development, manufacturing and marketing of flash memory card products. Its data-storage solutions include removable cards and universal serial bus (NYSE:USB) drives, which can be used in a wide gamut of consumer electronics products, such as digital cameras and mobile phones.

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SanDisk Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the semiconductor company fell to $281.2 million ($1.14 per share) vs. $485.5 million ($2.03 per share) a year earlier. This is a decline of 42.1% from the year earlier quarter.

Revenue: Rose 18.8% to $1.58 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: SNDK reported adjusted net income of $1.29 per share. By that measure, the company beat the mean estimate of $1.23 per share. Analysts were expecting revenue of $1.57 billion.

Quoting Management: “We are pleased to deliver record quarterly and annual revenues with robust profitability,” said Sanjay Mehrotra, President and CEO. “The secular demand trends for NAND flash remain vibrant and we are particularly excited about the new growth opportunities for our business in the Enterprise and Client Computing markets.”

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the third quarter, net income fell 27.6% while the figure fell 3.7% in the second quarter and 4.5% in the first quarter.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 1.4 percentage points to 42% from the year earlier quarter. Over that time, margins have contracted on average four percentage points per quarter on a year-over-year basis.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 12 cents in the third quarter, by 5 cents in the second quarter, and by one cent in the first quarter.

Revenue has risen the past four quarters. Revenue increased 14.8% to $1.42 billion in the third quarter. The figure rose 16.6% in the second quarter from the year earlier and climbed 19.1% in the first quarter from the year-ago quarter.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the first quarter of the next fiscal year is $1.11 per share, up from $1.07 ninety days ago. For the fiscal year, the average estimate has moved up from $4.44 a share to $4.47 over the last ninety days.

Competitors to Watch: Western Digital Corp. (NYSE:WDC), STEC, Inc. (NASDAQ:STEC), OCZ Technology Group Inc. (NASDAQ:OCZ), Micron Technology, Inc. (NASDAQ:MU), EMC Corporation (NYSE:EMC), Seagate Technology PLC (NASDAQ:STX), Imation Corp. (NYSE:IMN), Quantum Corporation (NYSE:QTM), Hutchinson Technology Inc. (NASDAQ:HTCH), and Apple Inc. (NASDAQ:AAPL).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com