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SanDisk profit drops on costs
Despite a surge in sales, maker of flash memory and MP3 players cites plummeting prices and higher costs for reduced net income.
SanDisk, a maker of flash memory and MP3 players that hope to rival Apple's iPod line, said today that its third quarter fell despite a surge in overall sales.
SanDisk and Rhapsody.
For the quarter ended September 30, SanDisk posted a profit of $103.3 million, or 51 cents per share, down 3.9 percent from $107.5 million, or 55 cents per share, for the same period a year ago. That dip was due to plummeting flash memory prices and higher costs, the company said, and came despite a surge in revenue to $751.4 million from $589.6 million a year ago.
"Demand for our mobile products continued to be strong in the fast growing mobile phone market and we are pleased with our flash audio player US retail market share gains in the third quarter," SanDisk CEO Eli Harari said in a statement.
Wall Street analysts, on average, had expected earnings per share before certain items of 57 cents and revenue of $730.4 million, according to Reuters Estimates.
The news sent SanDisk shares down more than 8 percent to $56.50 in extended trading following the earnings report. The shares had closed up 2.6 percent at $61.73 in regular trading on Nasdaq.
In a conference call, Harari said he was pleased with sales of the company's Sansa e200 line of MP3 players and was confident that the company's recently announced integration with RealNetworks' Rhapsody and retailer Best Buy. The deals will integrate the new SanDisk's Sansa e200R into the Rhapsody subscription service and the Rhapsody-powered Best Buy Digital Music Store.
"The cooperation with Best Buy is indicative of the desire of major retailers to develop a compelling alternative to Apple's iPod," Harari said.
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