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SanDisk Reports Quarterly Loss, Lowers Guidance

SanDisk, a maker of flash memory cards for cellphones and digital cameras, reported a fourth-quarter net loss due to acquisition charges, but earnings before one-time items beat analysts estimates.

SanDisk's stock fell, however, after the company lowered guidance for the first quarter.

The company reported a fourth-quarter net loss of $35.1 million, or 17 cents a share, compared with year-earlier net income of $133.9 million, or 68 cents a share.

Quarterly income was affected by several one-time charges including $186 million for in-process technology acquired from Msystems, an Israeli maker of memory for mobile phones, which SanDisk acquired last November in a $1.5 billion all-stock deal.

The company also recorded $20 million in charges for other acquisitions and $31 million for stock options expensing.

Excluding those costs, SanDisk reported a profit of $191.7 million, or 87 cents a share, above the Thomson Financial consensus estimate of 72 cents a share.

Revenue for the quarter increased to $1.16 billion from $750.6 million, including a $115 million contribution from Msystems, SanDisk said average selling prices per megabyte sold fell 17% from the third quarter's level, within the company's forecast range of a 15% to 20% decline.

During a conference call with investors, SanDisk said it has benefited from growing demand for flash memory in video recorder-equipped mobile phones, video imaging applications and cell phones with more-sophisticated screens and chips.

SanDisk said that it expects first-quarter revenue in a range of $785 to $890 million, compared with the current Thomson Financial forecast of $927 million.

"In the first quarter of 2007 we expect continuing robust demand for our mobile OEM products, seasonally lower retail sales, and a decline in margins due to the prevailing challenging market pricing for flash memory," CEO Eli Harari said in a prepared statement.