July 21st, 2008
SanDisk reports loss; stock takes beating after-hours
Shares of SanDisk are getting clobbered in after-hours trading, down more than 13 percent after the company reported a net loss of $68 million, or 30 cents per share, and a one percent drop in revenue for its second quarter. A surprised Wall Street had been expecting earnings of 13 cents per share. SanDisk attributed the performance of the company to “rapid deterioration in consumer confidence” in the current economy.
As a consumer, I don’t know if my confidence has deteriorated. Over the weekend, I picked up a bargain-priced twin-pack of 1-gigabyte MicroSD cards for the cell phones for less than $10. Sure, there were plenty of higher-priced 2-gigabyte and 4-gigabyte cards on display, as well, but I personally didn’t see the need for such capacity. My 20-something brother-in-law, who religiously snaps pics, shoots video and stores music on his phone, has yet to run into a capacity issue on his 1-gig card and passed when I mentioned the 2-gig and 4-gig cards. Why would I need one of those, he asked?
Could it be that SanDisk overestimated consumer demand or willingness to add extra storage to portable electronics that use such cards - from cell phones to digital cameras? Increasingly, as mobile phones become more like portable handheld computers, the demand for storage could take off. But, as mobile broadband takes off, consumers have the option of storing data from their cell phones on a memory card or “in the cloud.” At the same time, Apple’s iPhone 3G - which hit sales of 1 million during the opening weekend - does not come equipped with a memory card slot for additional storage. Apple expects to sell 10 million iPhones worldwide by the end of the year.
Earlier this year, SanDisk rolled out 2-GB, 4GB and 8GB memory cards even as the company warned of a slowdown in sales because of the economy.
Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of his industry affiliations.
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