SanDisk Earnings Cheat Sheet: Increasing Costs Tighten Margins as Net Income Falls

Rising costs hurt S&P 500 (NYSE:SPY) component SanDisk Corporation (NASDAQ:SNDK) in the second quarter as profit dropped from a year earlier. SanDisk Corp. 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 Second Quarter

Results: Net income for SanDisk Corporation fell to $248.4 million ($1.02 per share) vs. $257.9 million ($1.08 per share) a year earlier. This is a decline of 3.7% from the year earlier quarter.

Revenue: Rose 16.6% to $1.37 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: SNDK reported adjusted net income of $1.14 per share. By that measure, the company beat the mean estimate of 97 cents per share. It beat the average revenue estimate of $1.34 billion.

Quoting Management: “We delivered record quarterly revenue, driven by our broad product offerings and our well diversified Retail and OEM channels,” said Sanjay Mehrotra, President and CEO, SanDisk. “Solid execution on product cost reductions enabled strong profitability. Our integration of Pliant Technology is progressing well and we are excited by our business prospects in the enterprise storage segment.”

Key Stats:

The company has now topped analyst estimates for the last four quarters. It beat the mark by one cent in the first quarter, by 9 cents in the fourth quarter of the last fiscal year, and by 19 cents in the third quarter of the last fiscal year.

Gross margin shrank 1.7 percentage points to 44.6%. The contraction appeared to be driven by increased costs, which rose 20.4% from the year earlier quarter while revenue rose 16.6%.

Revenue has risen the past four quarters. Revenue increased 19.1% to $1.29 billion in the first quarter. The figure rose 6.9% in the fourth quarter of the last fiscal year from the year earlier and climbed 31.9% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last two quarters. In the first quarter, net income fell 4.5% from the year earlier quarter.

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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(Source: Xignite Financials)