SanDisk Poised for Growth

Leading flash memory producer and hard disk manufacturing company SanDisk Corporation (SNDK) has declared that a leading Chinese manufacturer of portable computers, e-book readers and other consumer electronics products named Malata; Wanlida Group Co. Ltd, has selected SanDisk’s 16-gigabyte (GB) pSSD modular solid state drives (SSD) Gen2.

This product will be used by Malata, in its new pocket design netbook, with dimensions of 256X27X143mm and an 8.9 inch LCD screen. So netbook is a newly growing area, with a potential to offer major growth in the coming years.

This apart, recently the company was also in the news for shipping the world’s highest-capacity removable memory card to be used in mobile phones. This card has a 32 gigabyte (GB) storage capacity, thus enhancing the functional capacity of a mobile device. The new microSDHC card offers consumers an unprecedented level of freedom and flexibility in how they store, send and enjoy digital content.

In this age of smartphones, where technical enhancements are taking place at regular intervals, advanced storage capacity will enhance the mobile offices, music players, movie storage, video recording and other features of the mobile device. SanDisk is continuously introducing innovative new products to retain its market leading position.

The company posted very encouraging fourth quarter 2009 results, exceeding the management guidance. SanDisk witnessed major gains in the OEM business and higher product revenue and has provided a decent guidance for the first quarter. The company has reduced its cost of production significantly, which in turn improved the gross margin substantially in 2009.

The Zacks Consensus Estimate also tells a positive tale. The estimate for the upcoming March 2010 quarter is $0.49, which is a year-over-year growth of 189.1%, while for fiscal year 2010 the estimate is $2.41, representing a growth rate of 49.7% over 2009 levels. Seven of the analysts covering the stock have made upward revisions to their March quarter estimate, while 8 have revised their estimate upward for fiscal year 2010, with no downward revision. The strong agreement indicates that results will be up, which may move the rank upward.

We are also optimistic about the long-term growth story of SanDisk.