SNDK Conference Call Summary

SNDK Conference Call Summary.....courtesy of briefing.com

Co guided Q2 total revs at $720-825 mln vs the $838.2 mln(Reuters) $832.9 mln(FC) consensus. Breakdown is $625-725 mln in product revs and $95-$100 mln in license and royalty revs. Also guided non-GAAP product gross margin at 15-20% for Q2. Giving some color on low guidance "it reflects the significant growth in units and bits in our ongoing business. But remember that is partially offset by the continued decline of the white label USB business as well as the elimination of the consolidation of twin SYS and twin SYS added $53 million of revenue in the first quarter. There definitely is what we believe is good growth and units and bits offset by the two items I mentioned and also offset by the pricing decline in the second quarter CEO says" First quarter was a down quarter for SanDisk and for the industry as a whole. Excess supply, coupled with soft seasonal demand in retail precipated the need for sharply lower pricing. Accordingly, we have taken pricing actions for the second quarter to narrow the pricing gap between us and our competitors." They anticipate the transition to LMC will favor SanDisk over competitors. Expect modest revenue from MLC this year with acceleration in 2008. Expect demand for Fab 3 and Fab 4 to be very strong in Q4. Fab 3 is achieving exceptionally competitive cost and as long as it operated at the leading edge, and fully utilized Co believes the ROI will be very good. Saying Q1 retail sales showed more seasonal slowdown Q/Q than last year. Commenting that NAND Flash market experienced structural changes that could potentially bring about periods of considerable supply shortages over the next two to three years. CEO conclusion, "In order to maximum long term value creation, we believe that the benefit of assured low cost supply outweigh the pain of short-term imbalances such as excess inventory that inevitably materialized during industry down cycles. We are aware of our share holders concerns for the short term. However we believe we were executing the correct strategy for achieving SanDisk's long term strategic goals in the market" Trading at $43.20 after hours, down 2 dollars from the 4:00 close.