Revenue $1.2B: First-Ever Billion Dollar Quarter
Milpitas , CA, January 30, 2007 - SanDisk® Corporation (NASDAQ:SNDK), the world's largest supplier of flash storage card products, today announced results for the fourth quarter ended December 31, 2006. The Company's fourth quarter results reflect the recent acquisition of msystemsTM Ltd., or msystems, that closed on November 19, 2006, and are compared to pre-acquisition results from prior reporting periods. Fourth quarter revenue increased 55% on a year-over-year basis to a record $1.164 billion, including $115 million of revenue from msystems. Standalone SanDisk fourth quarter revenue was $1.048 billion and increased 40% on a year-over-year basis. Fourth quarter net loss as reported on a consolidated basis and in accordance with U.S. Generally Accepted Accounting Principles (GAAP) was $35 million, or $0.17 per diluted share, (including a charge of $186 million for the write-off of acquired in-process technology, $31 million for share-based compensation expenses, $20 million for other acquisition-related charges and a $10 million reduction in income taxes related to these items) compared to net income of $134 million, or $0.68 per diluted share, in the fourth quarter of 2005.
Total revenue for fiscal 2006 was $3.258 billion, up 41% from $2.306 billion in 2005. Standalone SanDisk total revenue was $3.142 billion and increased 36% for the year. Consolidated net income was $199 million, or $0.96 per diluted share (including a charge of $226 million for the write-off of acquired in-process technology, $101 million for share-based compensation expenses, $32 million for other acquisition-related charges and a $35 million reduction in income taxes related to these items) compared to net income of $386 million, or $2.00 per diluted share in 2005. "The seasonally strong fourth quarter was our first ever billion dollar quarter, completing a year of excellent growth in revenue, standalone SanDisk profit and market share," said Eli Harari , Chairman and CEO of SanDisk. "In Q4 we experienced excellent sales across the board, in both the retail and OEM channels, and spanning across our consumer cards, mobile cards, MP3 players and USB flash drives. I am pleased with the very strong execution by our operations and supply chain resulting in a 73% sequential increase in megabytes sold and a strong non-GAAP operating margin for the SanDisk standalone business, due in large part to our continuing focus on cost reductions."
"In the first quarter of 2007 we expect continuing robust demand for our mobile OEM products, seasonally lower retail sales, and a decline in margins due to the prevailing challenging market pricing for flash memory. Internally we are focused on executing the integration of msystems and driving continued cost reductions by commencing the transition of our captive production from 70-nanometer to 56-nanometer NAND MLC in the first quarter. In early January, we unveiled exciting new products for new markets: SSD (for notebook PCs), ReadyBoost™ flashdrives (for Microsoft Vista™), Sansa® View (our first flash Personal Video Player), Sansa® Connect™ (for Wi-Fi® content sharing) and USBTV (a revolutionary new product bridging PC and TV). We believe these products will fuel new demand later this year," Harari concluded.
Judy Bruner , SanDisk's Executive Vice President, Administration and CFO, is scheduled to appear on Bloomberg TV's "Bloomberg On The Markets", January 31, 2007 beginning at approximately 6:53 a.m. PST.
SanDisk's fourth quarter 2007 conference call is scheduled for 2:00 p.m. PST, Tuesday, January 30, 2007. The conference call will be webcast by CCBN and can be accessed live, and throughout the quarter, at SanDisk's website at www.sandisk.com/IR and at www.streetevents.com for registered streetevents.com users. To participate in the call via telephone, the dial-in number is (913) 981-5523. 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.
This news release contains certain forward-looking statements, including statements about our business prospects and outlook for the first quarter of 2007, including anticipated increased demand for our mobile OEM products, demand for certain new products for 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 a scheduled appearance by 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 or a slower adoption rate for these products in current and new markets that we are targeting, 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 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, 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, less than expected growth in the average megabyte capacity per card, price increases from non-captive flash memory sources and third-party subcontractors, 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, the timely development, internal qualification and customer acceptance of new products that are based on 56-nanometer NAND technology, fluctuations in license and royalty revenues, business interruption due to earthquakes, hurricanes, pandemics, power outages or other natural disasters, particularly in areas in the Pacific Rim and Japan where we manufacture and assemble products, potential impact of high energy prices and other global events outside of our control which could adversely impact consumer confidence and hence reduce demand for our products, risks related to our acquisition of msystems, including that we may not realize the expected benefits of the acquisition due to integration challenges, the loss of customers, suppliers, distributors or other third parties or other issues, 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 and that we may incur charges or other accounting changes as a result of the merger, the risk that scheduled appearances by our executives could be cancelled or delayed by us or the network, and the 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 January 1, 2006 and our quarterly reports on Form 10-Q. Future results may differ materially from those previously reported. We do not intend to update the information contained in this release.
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 V-Mate are trademarks of SanDisk Corporation. Other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).
SanDisk Supporting Documents (.pdf)
- Condensed Consolidated Statements of Operations
- Reconciliation of GAAP to Non-GAAP Operating Results (*)
- Reconciliation of GAAP to Non-GAAP Operating Results
- Condensed Consolidated Balance Sheets
- Condensed Consolidated Statement of Cash Flows
Lori Barker Padon