SanDisk cuts revenue forecast, shares fall

SanDisk iXpand

SanDisk said it expects fourth-quarter revenue to be lower than it had forecast, citing weaker-than-expected sales of retail products and NAND storage chips.

Shares of the company, which supplies the memory chips for Apple's iPhones, fell 11 percent to $86.48 in morning trading. (Get the latest quote here.)

The weak revenue is likely due to Samsung Electronics shifting focus to its chip business, among others, to help make up for declining smartphone sales, Pacific Crest Securities Monika Garg said.

NAND memory chips are widely used in smartphones, cameras and other mobile devices to store music, pictures and other data.

Samsung is grappling with lower internal sales of its NAND chips due to weak smartphone sales, meaning the company would be selling its chips in other markets, which impacts pricing, Garg said.

Several analysts estimated Samsung's chip business earned more than its mobile business in October-December, buoyed by healthy demand for memory chips from personal computers and smartphones.

SanDisk, which is increasingly using its chips to build and sell solid-state drives directly to companies and consumers, had already warned of supply constraints for the quarter.

The company said on Monday it expects revenue of $1.73 billion for the quarter ended Dec. 28, down from its previous forecast of $1.80 billion to $1.85 billion.

Analysts' on average were expecting revenue of $1.83 billion, according to Thomson Reuters I/B/E/S.

SanDisk also cut its adjusted gross margin estimate to about 45 percent compared from its forecast of 47 percent to 49 percent.

SanDisk will report its fourth quarter results on Jan. 21.