SanDisk Corporation, a leader in flash memory storage solutions, is set
to release its Q4 2012 earnings Wednesday, January 23. The company reported
revenues of $1.3 billion in Q3, which was a 10% decline year-over-year, but a
23% increase on a quarter-on-quarter basis. Overall, we think that SanDisk has
positioned itself well in an industry, which is struggling due to
oversupply.
We
saw signs of NAND price stabilization in SanDisk’s Q3 earnings and will be
closely watching whether or not this trend has continued during Q4.
Additionally, we will watch SanDisk’s market share in the Solid State Drive
market because this product line will be the key to the company’s growth going
forward.
A major drag on SanDisk’s profitability over the last year has been a decline in NAND flash prices. However, the company was less affected by these declines in Q3 2012, as it reported sequential price declines of only 8% for the quarter compared to 20% for Q2 2012. We think that this trend will continue as large NAND flash manufacturers have kept cutting capital expenditures over the past quarter, which over the long term should help bring stability to NAND flash prices.
We are confident of this prediction because one of SanDisk’s competitors, Micron, reported that there was a 5% increase in the average selling price of NAND flash towards the latter part of fourth quarter. However, the company still maintains that it is difficult to forecast the future trend in prices. We will be closely watching what SanDisk’s management has to say about NAND flash prices to better understand how it fared during the quarter.
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