SanDisk: Fiscal 4Q09 Financial Results
Record quarterly product revenue, profit and cash flow
This is a Press Release edited by StorageNewsletter.com on January 29, 2010 at 3:01 pm| (in US$ millions) | 4Q08 | 4Q09 | FY08 | FY09 |
| Revenues | 863.9 | 1,242 | 3,351 | 3,567 |
| Growth | +44% | +6% | ||
| Net income (loss) | (1,758) | 339.5 | (1,986) | 415.3 |
SanDisk Corporation announced results for the fourth quarter and fiscal year ended January 3, 2010.
Total fourth quarter revenue of $1.24 billion increased 44% on a year-over-year basis and increased 33% sequentially. Total revenue for fiscal 2009 of $3.57 billion increased 6% from $3.35 billion in fiscal 2008.
Fourth quarter net income, in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $340 million, or earnings of $1.45 per diluted share, compared to net loss of ($1.76) billion, or ($7.78) per share, in the fourth quarter of fiscal 2008 and net income of $231 million, or $0.99 per diluted share, in the third quarter of fiscal 2009. The GAAP net income for fiscal 2009 was $415 million, or $1.79 per diluted share, compared to net loss of ($1.99) billion, or ($8.82) per share, in fiscal 2008.
On a non-GAAP basis, which excludes the impact of acquisition-related charges, share-based compensation expense, impairment of goodwill and acquisition-related intangible assets, non-cash economic interest expense associated with the cash-settled convertible note, and related tax adjustments and valuation allowance, fourth-quarter net income was $277 million, or $1.18 per diluted share, compared to a net loss of ($359) million, or ($1.59) per share, in the fourth quarter of fiscal 2008 and net income of $176 million, or $0.75 per diluted share, in the third quarter of fiscal 2009. The non-GAAP net income for fiscal 2009 was $427 million, or $1.84 per diluted share, compared to net loss of ($466) million, or ($2.07) per share, in fiscal 2008. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.
“We delivered a terrific fourth quarter in 2009 – our best performance ever in product revenue, profit and cash flow. These results demonstrate the success of the actions that we took this past year, including restructuring our captive supply and diversifying our OEM and retail channels that resulted in unit sales growth of 55% and gigabyte growth of 100% compared to the fourth quarter of 2008. Product gross margin was sharply higher due to continued strong cost reductions and stable pricing,” said Eli Harari, Chairman and CEO, SanDisk. “In 2010, we look forward to solid growth in our markets with a continued emphasis on profitability.”
4Q09 Metrics and Highlights
- Total revenue was $1.24 billion, up 44% year-over-year and up 33% sequentially.
- Product revenue was $1.14 billion, up 54% year-over-year and up 40% sequentially.
- License and royalty revenue was $100 million, down 18% year-over-year and down 18% sequentially.
- GAAP product gross profit was $501 million, or 44% of product revenue, compared to GAAP product gross loss of ($462) million, or (62%) of product revenue, in the fourth quarter of fiscal 2008 and GAAP product gross profit of $315 million, or 39% of product revenue, in the third quarter of fiscal 2009. Fourth quarter product gross profit included a $95 million benefit primarily from the sale of previously reserved inventory.
- Non-GAAP product gross profit was $509 million, or 45% of product revenue, compared to non-GAAP product gross loss of ($449) million, or (61%) of product revenue, in the fourth quarter of fiscal 2008 and non-GAAP product profit of $320 million, or 39% of product revenue, in the third quarter of fiscal 2009. Fourth quarter product gross profit included a $95 million benefit primarily from the sale of previously reserved inventory.
- GAAP operating profit was $376 million, or 30% of total revenue, compared to GAAP operating loss of ($1.63) billion, or (188%) of total revenue, in the fourth quarter of fiscal 2008 and GAAP operating profit of $240 million, or 26% of total revenue, in the third quarter of fiscal 2009.
- Non-GAAP operating profit was $417 million, or 34% of total revenue, compared to non-GAAP operating loss of ($568) million, or (66%) of total revenue, in the fourth quarter of fiscal 2008 and non-GAAP operating profit of $263 million, or 28% of total revenue, in the third quarter of fiscal 2009.
- Cash flow from operations was $388 million and free cash flow was $431 million.
- Total cash and equivalents, short and long-term investments at the end of the fourth quarter were $3.02 billion compared to $2.54 billion at the end of the fourth quarter of fiscal 2008 and $2.58 billion at the end of the third quarter of fiscal 2009.
- Total memory units sold in the fourth quarter of fiscal 2009 increased 55% year-over-year and increased 22% sequentially.
- Gigabytes sold in the fourth quarter of fiscal 2009 increased 100% year-over-year and increased 44% sequentially.
- Average price per gigabyte sold in the fourth quarter of fiscal 2009 declined 23% year-over-year and declined 2% sequentially.
FY09 Highlights
- GAAP product gross margin was 27.6% compared to (15.7%) in fiscal 2008.
- Non-GAAP product gross margin was 28.4% compared to (13.4%) in fiscal 2008.
- GAAP operating margin was 14.6% compared to (58.9%) in fiscal 2008.
- Non-GAAP operating margin was 17.6% compared to (23.4%) in fiscal 2008.
- Operating cash flow was $488 million compared to $88 million in fiscal 2008.
- Free cash flow was $438 million compared to ($338) million in fiscal 2008.
Comments
Abstracts of the earnings call transcript:
Dr. Eli Harari , chairman and CEO:
"The Q1 '09 we sold approximately 20% of our captive capacity Toshiba
and we further cut our captive by throttling the capacity utilization
rate and our finishing fabs by more than 20% in the first half of 2009.
At the same time, throughout 2009, we sustained our investment advance
NAND flash and 3D read/write, 3-bits-per-sale and 4-bits-per-sale NAND
architecture, advanced proprietary controller chips, and new products
for both our retail and OEM businesses. And in Q2 '09 we renewed patent
cross license agreement, with Samsung electronics.
"Turning to capacity current industry forecast project a 2010 total NAND
industry bit growth in the range of 70% to 90%. For SanDisk we
currently project our captive that offered to increase our 2010 by up
to 70% compared to output in 2009, approximately in line with our
currently project bit demand growth in 2010 businesses. Our bit output
increase will come primarily from completion of the technology
transition to 32 nanometer by late 2010, as well as modest incremental
wafer capacity, utilizing the unused cleaning space in the Yokkaichi
Fab 4."
Judy Bruner, CFO:
"Our fourth quarter results reflected strong growth in both OEM and
retail channels. With retail revenue up 41%, and OEM revenue up 40%
sequentially. OEM represented 56% of our fourth quarter product
revenue, the same proportion as in the third quarter, and for the year,
our product revenue was equally balanced at a 50/50 mix of retail and
OEM.
"Our fourth quarter retail revenue was down 6% year-over-year with the
decline due primarily to increasing amounts of our mobile business,
going through mobile network operators stores that we now count as OEM.
Our fourth quarter OEM revenue was up 215% year-over-year, with the mix
from the mobile market increasing to more than 80% of our OEM revenue.
Our total fourth quarter product revenue grew 54%, year-over-year, with
units up 55%, ASP per gigabyte down 23%, and average capacity up 29%.
On a sequential basis, our ASP per gigabyte declined 2%, and our total
average capacity was up 18% driven primarily by the OEM mobile product
mix.
"We are forecasting total revenue for Q1 between 875 million, and 950
million which includes license and royalty revenue between $80 million
and $90 million. Fully reflecting the new Samsung license agreement.
For the full year 2010, we forecast total revenue between 4.0 million
and 4.4 billion, including license and royalty revenue between 320
million and 360 million."
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