MOUNTAIN VIEW, Calif.--Flash memory maker SanDisk Corp. said it would put a freeze on expanding one of its fabs after fourth quarter and fiscal year results came in below analyst expectations on Wednesday (Jan. 25). The firm also announced weak first quarter revenue guidance based on lower demand for flash memory in mobile.
"In the fourth quarter, certain of our mobile OEM customers lowered their NAND forecast to us due to lower demand for their products," said CEO Sanjay Mehrotra during an earnings call."We believe this will impact our revenue opportunity in the first half of 2012."
SanDisk reported a Q4 profit of $281.2 million, down 42 percent from $485.5 million in the same period of 2010. Total revenue for fiscal 2011 was $5.66 billion, an increase of 17 percent from $4.83 billion in fiscal 2010, however, those results were skewed by last year’s $203 million tax-provision benefit.
For the first quarter of 2012, Sandisk served up a rather soft outlook of revenue between $1.3 billion to $1.35 billion, below the $1.46 billion expected by analysts. The company also expects its yearly revenue to fall in the region of $6.2 billion to $6.6 billion, compared with Wall Street’s predicted $6.66 billion.
While total revenue rose 19 percent, to $1.58 billion, gross margins narrowed to 42 percent from 43.4 percent.
Owing to softening consumer demand, Sandisk’s Chief Financial Officer Judy Bruner announced that the firm would be pausing its plans to expand its Fab 5 in Japan's Mie prefecture from the end of January until at least July. Production had originally been slated to restart in May.
Bruner said, however, that the firm remained optimistic the second half of 2012 would deliver better growth, and improved demand, especially in terms of the growing momentum around solid state drives.
"As the SSD business grows as a percentage of our mix, particularly in the enterprise segment, we believe seasonality will be less pronounced," she said.
Bruner also adjusted Sandisk’s expected gross margins to between 39 and 42 percent for the current period and full year, down from 44 percent in 2011.
The firm is also expected to spend some $1.1 billion to $1.6 billion in capital expenditure in 2012.