28 Aug

Must-know: An in-depth review of SanDisk’s 2Q14 earnings

WRITTEN BY Anne Shields


SanDisk (SNDK) was founded in 1988. It’s a pioneer in flash memory technology. It designs, develops, and manufactures NAND flash memory storage solutions. NAND Flash is used in devices like digital cameras, USB drives, tablets, smartphones, and high-end laptops that involve large files that are frequently uploaded and replaced.

According to Statista, in 2Q14, Samsung (SSNLF) led the NAND flash memory manufacturers market with its 30% market share. It’s followed by Toshiba, which held 21% of the market. SanDisk and Micron technologies (MU) held 19% and 14.5% market shares, respectively. SK Hynix (HXSCL) and Intel (INTC) held 8% and 7% market shares, respectively. Seagate is a diversified player that manufactures conventional HDD and flash-based memory modules for retail as well as enterprise clients.

Must-know: An in-depth review of SanDisk’s 2Q14 earnings

The chart above shows the contribution of various operating segments towards the company’s total revenues in 2Q14. The Embedded segment includes the flash product line, multi-chip packages, iNAND solutions, which combine NAND and mobile DRAM in an integrated package, and custom embedded solutions that are used in mobile phones, tablets, and other portable devices.

The removable segment includes removable flash memory imaging cards that are used in mobile products like smartphones, tablets, and eReaders. SSDs are high-speed energy-efficient data storage solutions.

2Q14 earnings review

In 2Q14, SanDisk reported that its revenues and EPS grew by 11% and 16% year-over-year. In 2Q14, the company reported revenues of $1.63 billion and EPS of $1.41. In 2Q14, it reported net income, cash flow from operations or CFO, and free cash flow or FCF at $329 million, $241million, and $197 million, respectively. A dividend of $0.30 per share was announced for 3Q 2014.

In 2Q14, the commercial channel and retail channel recorded growth of 14% and 4% year-over-year and contributed 67% and 33% to total revenues, respectively. For FY2013, commercial and retail contributed ~63% and ~37% of the total revenues, respectively.

“Commercial channel” refers to sales done directly and through distributors to original equipment manufacturers or OEMs. “Retail channel” refers to the sale of products directly to consumer electronics stores, office superstores, mobile phone stores, and e-commerce retailers.

Embedded products, including iNAND and custom embedded solutions, on a quarterly and yearly basis showed growth of 3% and loss of 29%, respectively. As a segment, they contributed 19% to Q2 2014 total revenues.

SSD grew 97% and 9% year-over-year and quarterly, respectively. SSDs, owing to their remarkable growth, driven by growth in both client and enterprise SSDs, contributed 29% of the 2Q14 consolidated revenues. SAAS and SATA products were responsible for the doubling of enterprise SSD revenues year-over-year and 30% growth quarterly.

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