Press Releases

SanDisk Announces First Quarter Results

Apr 26, 2007

Revenue Increases 26% Year-Over-Year

Milpitas, CA, April 26, 2007 - SanDisk® Corporation (NASDAQ:SNDK), the world's largest supplier of flash storage card products, today announced results for the first quarter ended April 1, 2007.  First quarter revenue increased 26% on a year-over-year basis to $786 million and the net loss in accordance with U.S. Generally Accepted Accounting Principles (GAAP) was $0.6 million, or $0.00 per share, compared to GAAP net income of $35 million, or $0.17 per share, in the first quarter of 2006. 

Excluding the impact of acquisition related charges, stock compensation expense and the related tax effect, first quarter non-GAAP net income was $45 million, or $0.19 per share, compared to first quarter 2006 non-GAAP net income of $90 million, or $0.44 per share.

"First quarter results reflected the current difficult market conditions," said Eli Harari, Chairman and CEO.  "In the first quarter our industry experienced excess supply, sharp price declines, and depressed margins.  These market conditions were exacerbated by weak seasonal consumer demand in retail.  One highlight for the quarter was that the mobile market became our largest revenue generator with 27 million units sold in the quarter.   Another highlight was the signing of an important licensing agreement with Hynix, which again validates our strong intellectual property portfolio.  In another important milestone for our flash technology, this week Dell announced the launch of notebook PCs that incorporate our 32-gigabyte Solid State Drive (SSD)."

"Looking forward, we project a pick-up in demand during the seasonally strong back half of the second quarter.  However, excess supply and depressed pricing is expected to continue through the second quarter, possibly extending through the summer months, putting pressure on our margins.  Our outlook is optimistic for renewed growth heading into the fourth quarter of 2007 and forward to 2008.  This optimism is based on our expectation of continuing penetration into multimedia handsets, the steady stream of exciting new consumer product introductions such as the Sansa® Connect™, and the exceptionally attractive price points for our products now available to consumers." 

Key Metrics and Highlights

  • Product revenue was $689 million in the first quarter, up 28% year-over-year.
  • License and royalty revenue for the first quarter was $97 million, up 13% year-over-year.
  • SanDisk and Hynix announced a patent cross license and product supply agreement and also signed a memorandum of understanding that outlines the planned formation of a memory manufacturing joint venture.
  • Total megabytes sold in the first quarter increased 209% on a year-over-year basis and decreased 22% from the record fourth quarter of 2006. 
  • Average price per megabyte sold declined 62% on a year-over-year basis and 23% sequentially.
  • Average retail card capacity in the first quarter was 1231 megabytes, up 87% from the first quarter of 2006 and up 11% sequentially.
  • GAAP product gross margin in the first quarter was 14.2%, compared to 28.4% in the first quarter of 2006.  First quarter fiscal 2007 non-GAAP product gross margin was 18.5% compared to 28.4% in the first quarter of 2006.
  • Cost cutting measures taken in the first quarter included a reduction in workforce, executive salary reductions and a salary freeze for all other employees.
  • msystems™ and SanDisk completed substantial integration activities.
  • Operating loss on a GAAP basis was $20 million compared to GAAP operating income of $58 million in Q1 of 2006.  Non-GAAP operating income was $47 million, or 6% of revenue, compared to non-GAAP operating income of $120 million or 19% of revenue in the first quarter of 2006.
  • Cash flow from operations was $255 million for Q1 2007 and total cash, short-term and long-term investments increased sequentially by $217 million to $3.5 billion.
  • Retail presence was more than 210,000 storefronts, including 67,000 in the mobile channel at the end of the quarter.
  • SanDisk launched 32-gigabyte (GB) SSDs as drop-in replacements for hard disk drives in notebook PCs.  
  • The Sansa Connect wireless internet MP3 player received excellent reviews.  SanDisk also launched the new Shaker™ MP3 player designed for kids and families.
  • SanDisk and Sony Corporation agreed to develop the SxS™ (S by S) memory card specification for high-speed in professional camcorders.
  • SanDisk introduced the industry's highest density 8 GB SD high capacity (SDHC™) and 4 GB microSDHC™ cards. 

Scheduled Interviews
SanDisk Corporation Chairman and Chief Executive Officer, Eli Harari, is scheduled to appear on CNBC's "Closing Bell with Maria Bartiromo," on April 26, 2006 at approximately 1:20 p.m. PDT.  Judy Bruner, SanDisk's Executive Vice President, Administration and CFO, is scheduled to appear on Bloomberg TV's "Bloomberg On The Markets", April 27, 2007 beginning at approximately 8:39 a.m. PDT.

Conference Call
SanDisk's first quarter 2007 conference call is scheduled for 2:00 p.m. PDT, Thursday, April 26, 2007.  The conference call will be webcast by CCBN and can be accessed live, and throughout the quarter, at SanDisk's website at and at for registered users.  To participate in the call via telephone, the dial-in number is (800) 238-9007.  The dial-in password is 4311569.  A copy of this press release will be furnished with the Securities and Exchange Commission on a current report on Form 8-K and will be posted to our website prior to the conference call.

A complete reconciliation between GAAP and non-GAAP information referred to in this release is provided in the attached tables.

Forward-Looking Statements
This news release contains certain forward-looking statements, including statements about our business prospects and outlook, anticipated increased demand for our mobile OEM products, anticipated design-in for products, demand for certain new products in new markets, seasonally lower retail sales, a decline in margins due to prevailing challenging market pricing for flash memory, market supply and demand, cost reductions, expected technology transitions and the timing and cost benefits thereof, our planned investments in advanced technologies, products, markets and our brand, and scheduled appearances by our Chairman and CEO and our CFO that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate and may significantly and adversely affect our business, financial condition and results of operations.  Risks that may cause these forward-looking statements to be inaccurate include among others:

  • slower than expected growth in market demand for our products including, for example, the solid state drive or a slower adoption rate for these products in current and new markets that we are targeting,
  • future average selling price erosion that may be more severe than our expectations due to decreased demand or excess industry capacity of flash memory from ourselves as well as from existing suppliers or from new competitors, 
  • any interruption of or delay in supply from any of the semiconductor manufacturing or subcontracting facilities, including test and assembly facilities that supply products to us,
  • slower than expected expansion of our global sales channels,
  • fluctuations in operating results, unexpected yield variances and delays related to our conversion to 56-nanometer NAND flash technology or the ramp-up of the 300mm flash fabrication facility,
  • our inability to make additional planned smaller geometry conversions in a timely manner,
  • our ability to agree on the definitive terms of a joint venture with Hynix,
  • less than expected growth in the average megabyte capacity per card,
  • higher than expected operating expenses,
  • higher than anticipated capital equipment expenditures,
  • adverse global economic and geo-political conditions, including adverse currency exchange rates and acts of terror and war,
  • fluctuations in license and royalty revenues,
  • business interruption due to earthquakes, hurricanes or other natural disasters, particularly in areas in the Pacific Rim and Japan where we manufacture and assemble products,
  • risks related to our acquisition of msystems, including that we may not realize the expected benefits of the acquisition due to integration challenges or that we may incur substantial costs or other damages associated with pending or future litigation related to the merger or costs or damages related to msystems' prior stock option grant practices,
  • the risk that scheduled appearances by our executives could be cancelled or delayed by us or the network, and
  • other risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our Form 10-K for the fiscal year ended December 31, 2006. 

Future results may differ materially from those previously reported.  We do not intend to update the information contained in this release. 

About SanDisk  
SanDisk is the original inventor of flash storage cards and is the world's largest supplier of flash data storage card products using its patented, high-density flash memory and controller technology.  SanDisk is headquartered in Milpitas, CA and has operations worldwide with more than half its sales outside the U.S.

SanDisk, the SanDisk logo, and Sansa are trademarks of SanDisk Corporation, registered in the United States and other countries.  msystems is a trademark of msystems Ltd.  Sansa Connect and Shaker are trademarks of SanDisk Corporation.  SD, microSD and SDHC are trademarks.  Other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).

 SanDisk Supporting Documents (.pdf)

Investor Contacts:        
Lori Barker Padon      
(408) 801-1384      
Jay Iyer
(408) 801-2067

Media Contact:
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(408) 801-1240



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