SanDisk Q3 Product Sales Soar 130%

SUNNYVALE, CALIF.— Flash memory data storage products supplier SanDisk, boosted by sales of higher margin Secure Digital (SD) cards and Cruzer, saw product revenue increase 130 percent, to $132 million in the third quarter, up from $57.3 million in the year-ago period.

At the same time, SanDisk moved into the black, reporting net income of $11.3 million in the third quarter, ended Sept. 30, compared with a net loss of $170.5 million in the same three months in 2001. Product gross margin improved to 34 percent, said the company, primarily due to stable pricing conditions and lower product costs, due mainly to a higher mix of more cost effective products.

For the nine months, product revenue jumped about 43 percent, to $334.2 million, up from $233.5 million in the same period last year. The company recorded net income of $16.6 million for the nine months, compared with a net loss of $323.6 million year over year.

In the near term, the company expects the fourth quarter — traditionally its strongest, driven by holiday retail sales — to maintain this critical position.

Product gross margin is expected to be about 30 percent, due to the anticipated increased availability of flash memory, leading to declining average selling prices in the fourth quarter, which will be partially offset by continuing cost reductions.

Longer term, SanDisk believes that the flash markets will continue to grow steadily into 2003.