SanDisk Ends Rocky Year with $1.9B Loss in Q4

SanDisk, the world's largest supplier of flash memory cards and holder of hundreds of valuable industry patents, probably wishes it could forget 2008 and start all over again.

The company boasted a stock that sold for more than $33 in May 2008, and shortly afterward it had a generous buyout offer on the table from longtime competitor Samsung. But things have changed big time in the SSD memory business, thanks to a continual oversupply of flash in the market.

SanDisk was trading Feb. 3 for under $9 after the company reported that its Q4 2008 revenues fell a whopping 31 percent to $863.9 million from $1.25 billion a year ago.

The company's net loss for the quarter was $1.86 billion, or $8.25 per share. This compares with a net income of $106 million, or 45 cents per share, a year ago.

Resource Library:

Total revenues for the fiscal year 2008 fell 14 percent to $3.35 billion from $3.90 billion a year ago. Net loss for the year was $2.07 billion or $9.19 per diluted share compared to net income of $219 million or 93 cents per share a year ago.

SanDisk common stock in the last year traded as high as $33.17 in May 2008 and as low as $5.07 in November 2008. Based on its Feb. 2 closing price of $11.28, the company has market cap of $2.55 billion.

SanDisk has suffered along with the rest of the flash industry through an oversupply of NAND chips, especially those ticketed for use in servers and laptops.

Flash memory, used in such products as iPods, cell phones and digital cameras, has seen its prices fall sharply. NAND flash is selling for under $1.50 per gigabyte; 18 months ago, it commanded around $4 to $5 per gigabyte.

Considering SanDisk's recent woes, Samsung avoided a big mistake last Oct. 22 when it withdrew its $26-per-share bid to acquire SanDisk.

The move by Samsung came only two days after longtime flash memory partners Toshiba and SanDisk announced an agreement that turned over 30 percent of SanDisk's share of current manufacturing capacity of the companies' joint ventures to Toshiba.

SanDisk received equipment-leasing cost reductions and a cash infusion amounting to about $1 billion as its part of the deal.

The board of SanDisk on Sept. 17 rejected a formal bid by Samsung for the $26-per-share takeover, believing that the offer undervalued the company's substantial flash memory intellectual property portfolio.

SanDisk has invested substantial time and resources into launching a third-generation family of SSDs -- appropriately called the G3 series -- that use multilevel-cell NAND flash memory in laptop computers. The company revealed this strategy on Jan. 8 at the Consumer Electronics Show in Las Vegas.

The G3 series drives are intended as drop-in replacements for standard spinning hard-disk drives in notebook PCs. The first releases in the SanDisk G3 line are SSD C25-G3 and SSD C18-G3 in the standard 2.5-inch and 1.8-inch form factors; each is available with a SATA (serial ATA)-II interface.

G3s will be available in midyear 2009 in capacities of 60GB, 120GB and 240GB, with subsequent prices of $149, $249 and $499, respectively.