January 26, 2012 / 12:11 AM / 6 years ago

SanDisk warns of tough first half of 2012

SAN FRANCISCO (Reuters) - Flash memory supplier SanDisk warned that weaker demand from some mobile device manufacturers would hurt its revenue in the first half of this year, sending its shares sharply lower.

In a tough economic climate, SanDisk said "certain" customers had scaled back their expectations for NAND chip demand, leading the chipmaker to put the ramp-up of a new production facility on hold.

"Some of the mobile (manufacturers) with whom we have high share, some of their models did not do as well in the market and that is one of the factors in terms of impacting some of the demand from these customers," Chief Executive Sanjay Mehrotra said on a call with analysts.

"We believe this will impact our revenue opportunity in the first half of 2012," he said.

Smartphones and tablets have caused a boom in NAND production, but SanDisk's customers have not all done equally well from the explosion in mobile gadgets.

Taiwanese smartphone maker HTC Corp recorded a worse-than-expected yearly profit decline in the fourth quarter as its models scrambled to compete with Apple Inc's iPhone and Samsung's Galaxy range.

NAND chips are used in smartphones, cameras and tablets to store data like movies and photos, and like many commodities see big price swings as supply and demand change.

SanDisk reported revenue of $1.577 billion for its fourth quarter, ended January 1, up 19 percent and meeting expectations of $1.573 billion, according to ThomsonReuters I/B/E/S.

It expects first-quarter revenue to fall to between $1.3 billion and $1.35 billion, compared to $1.462 billion expected by analysts.

The Milpitas, California company said it would wait to restart expansion of Fab 5 facility in Japan until July at the earliest. The facility is part of a joint venture with Toshiba.

SanDisk's adjusted earnings for the past quarter rose to $317 million, or $1.29 a share, from $307 million, or $1.27 a share, in the year-ago period. Analysts on average expected

$1.26.

Shares of SanDisk fell 8 percent following its earnings report, after closing 2.25 percent higher at $52.34 on the Nasdaq.

Reporting By Noel Randewich; Editing by Phil Berlowitz

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