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Slow Commercial Demand Hits SanDisk’s Fiscal 4Q15 Revenue

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4Q15 earnings update

The December 2015 quarter’s earnings season brought with it falling revenues and weaker guidance for almost all semiconductor companies. SanDisk (SNDK) and Texas Instruments (TXN) joined the fray and reported their fiscal 4Q15 earnings on January 27, 2016. Explore the series to understand the performance and future growth prospects of the two companies.

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SanDisk beats analysts’ estimates

SanDisk, a flash memory storage manufacturer who recently agreed to merge with Western Digital Corporation (WDC), announced its fiscal 4Q15 results that beat the analysts’ estimates. SanDisk’s revenue fell 11.5% YoY (year-over-year) to $1.54 billion in fiscal 4Q15, topping the analyst estimate of $1.44 billion. The revenue growth in the removable segment was offset by a fall in client SSD (solid-state drive) sales. However, sales grew on a sequential basis, with growth picking up in the second half of fiscal 2015.

The company’s non-GAAP[1. GAAP stands for generally accepted accounting principles] EPS (earnings per share) fell 3% YoY to $1.26 in fiscal 4Q15, beating the consensus estimate of $0.89. The EPS fell as more sales came from the retail segment. Note that the segment commands a lower margin.

After the earnings release, the company’s stocks rose 1.2% at $65 in the after-hours trading session on January 27, 2016. The stock is hovering in the middle of its 52-week range of $44.3 to $87.4.

Profitability

On a non-GAAP basis, the company’s gross margin fell from 45% in fiscal 4Q14 to 43% in fiscal 4Q15. Its operating margin fell from 24% to 22% during the same period as revenue fell faster than operating expenses. Revenue fell 11.5% YoY while operating expenses fell only 10% YoY.

Fiscal 4Q15 updates

  • During the quarter, SanDisk partnered with Nexenta Systems and Quanta Cloud Technology to supply its InfiniFlash System.
  • The company shipped its first batch of 48-layer, three-bits-per-cell of 3D NAND in retail products and began volume production of 3D NAND in New Fab 2 in January 2016. Intel (INTC) is also upgrading its plant in China (FXI) to manufacture 3D NAND.

In the next part of the series, we’ll look at the company’s financial position and guidance for fiscal 1Q16.

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