Although SanDisk Corp., Sunnyvale, Calif., boosted its net income by nearly 200% in the fourth quarter, the company performed below analysts' estimates and is predicting a slowdown in the first two quarters of 2001.
SanDisk cautioned investors about its first and second quarters of 2001 today, citing seasonality, increased pricing pressures, and slowing demand from OEMs as they continue their inventory corrections. As a result, the company believes its product revenue in the first quarter may be 15% - 20% below the just-completed quarter.
Product revenue for the quarter ended Dec. 31, 2000 was $154.7 million, an increase of 121% from $69.9 million for the same period last year. Revenue from licenses and royalties was $22.9 million, up 78% from $12.9 million in the fourth quarter of 1999.
SanDisk reported total revenue of $177.7 million for the quarter, below internal projections and 12% below the average Wall Street forecast, according to First Call/Thomson Financial. This is up 115% from $82.8 million in the fourth quarter of 1999.
"Market conditions softened significantly in the fourth quarter due to slowing economic conditions," said Dr. Eli Harari, president and chief executive of SanDisk. "Product demand slowed, resulting in reduced backlog and low near-term order visibility."
Total revenue for the fourth quarter increased by 4% over the third quarter of 2000. Product revenue increased 2% from $151.8 million in the third quarter of 2000. Revenue from licenses and royalties was 21% higher due primarily to retroactive royalties associated with the recently announced Lexar license agreement.
"Our sales through the retail channel increased substantially in the fourth quarter, spurred by successful holiday sales of digital cameras," Harari said. "However, this was not sufficient to compensate for reduced orders from OEMs, who appear to be working down their existing inventories in a slowing economy. Consequently, our sales in the quarter, although a record, were below our internal expectations."
Net income for the fourth quarter ended Dec. 31, 2000 was $29.5 million, or 41 cents per diluted share, up 195% compared to $10 million, or 15 cents per diluted share, in the same period last year.
Net income in 2000 was $298.7 million, or $4.11 per share, and included a one-time after tax gain of $204 million, or $2.81 per share, in the first quarter of 2000 from the conversion of SanDisk's foundry investment in United Silicon Inc. into shares of United Microelectronics Corp.
Revenue for fiscal 2000 was $601.8 million, an increase of 144% from $247 million for the previous year, due to higher product sales and higher revenue from licenses and royalties. Product revenue increased 156%, primarily the result of increased sales of CompactFlash and MultiMediaCard products.