San Francisco: SanDisk shares dropped as much as 11 per cent in late trading on Thursday after the biggest maker of flash-memory cards gave a sales forecast that fell short of estimates, citing lower prices for chips that store data in mobile phones.
SanDisk shares slipped as low as $46.75 (Dh171.72) in extended trading after the forecast. Before the report, they had gained 2.3 per cent to $52.34 at Thursday's close in New York. The stock has increased 7.8 per cent in the past year.
The company said it was putting the expansion of a plant on hold as prices fall for so-called Nand flash-memory chips, used to store information in portable devices such as Apple's iPhone. Production at suppliers like SanDisk and Samsung Electronics has gotten ahead of demand, according to Daniel Berenbaum, an analyst at MKM Partners LP in New York.
Price declines accelerated in the latter part of the fourth quarter, chief financial officer Judy Bruner said on a conference call on Thursday. That, along with lower orders from some mobile-phone customers, will hurt sales in the first quarter, she said.
Sales in the current period will be $1.3 billion to $1.35 billion, Bruner said. California-based SanDisk was projected to have sales of $1.46 billion, say analysts in a Bloomberg survey.
2012 forecast
For the full year, sales will be $6.2 billion to $6.6 billion, Bruner said. Analysts on average predicted annual sales of $6.64 billion.
"We expect the majority of our 2012 year-over-year revenue growth to be in the second half as overall demand improves," Bruner said on the call. The industry's ability to lower costs of production through the introduction of new technology is decreasing, she said.
For the fourth quarter, sales rose 19 per cent to $1.58 billion, the company said. Net income fell to $281.2 million, or $1.14 a share, from $485.5 million, or $2.01 a share, a year earlier.
