SanDisk Cuts Jobs, Pay
By Greg Scoblete -- TWICE, 2/20/2007
Las Vegas — Citing an “industrywide” deterioration in flash-memory component pricing, SanDisk announced job cuts and pay reductions.
As part of its cost-cutting measures, SanDisk will eliminate 10 percent of its workforce, or 250 employees, worldwide in March. Executives will see pay cuts as well, with CEO Eli Harari taking a 20 percent cut while the president and executive VPs see a 15 percent reduction and VPs see a 10 percent decrease. All other employees will have their salaries frozen.
The company also decided to “de-emphasize” its private-label USB flash-drive business in favor of its own branded products.
According to SanDisk, NAND pricing has dropped 50 percent in the past two months due to oversupply and seasonally weak demand. As a consequence, the company had to reduce its retail pricing 30 percent to 40 percent below fourth quarter 2006 levels to “maintain market share.”
“Although we believe there will be strong pickup in demand for our products in the second half of the year, we do not have visibility as to when the current aggressive pricing cycle will run its full course, and gross margins are likely to remain under significant pressure for several quarters,” Harari said in a statement announcing the cost-cutting measures.
