Memory price fears send SanDisk share price tumbling
By Jenny • Jan 31st, 2011 • Category: Industry News, Memory Cards, Mobile Computing Accessory News, USB
- Photo: osde8info / Flickr
The memory industry has had an unusually volatile time over the last 15 months, and memory manufacturers are paying the price. Even though the company posted a much better than expected forecast for the coming quarter, fears of declining SanDisk flash memory prices – and industry-wide declines – have sent many investors cowering.
The rise and fall
Over the past year, Sandisk’s share price rose a healthy 70 per cent due to stability in the prices of flash memory, coupled with a sharp rise in the sales of smartphones and tablets – where flash memory is used most. The company would then get brutalized this past week with Reuters reporting the company’s share price shed 9.9 per cent of its value after the company reported that gross margins for its fourth quarter results fell short of analyst’s expectations.
It’s all in the margins.
Analysts were expecting median gross margins of 45.2 per cent, but Sandisk only delivered gross margins of 43.7 per cent. What that means is that the profits the company is able to eek out from each sale is falling, attributable either to rising input costs or falling retail prices. In the memory industry’s case, it is the latter.
In fact, the price of memory dropped a steep 15 per cent in the fourth quarter, which means if you’re looking for a good deal on flash sticks, and other forms of flash memory, now is as good time to buy!
Why we agonise over financials
Not all tech readers care much for a company’s financial results. Nevertheless it’s important to take note of them due to the impact they have on the prices of components and products. If the price of Sandisk flash memory is expected to drop, while it may hurt the company, it is certainly a benefit to consumers looking to nab good deals. If you time it well, you get to capitalize heavily.
Tags for this article: sandisk, memory, smartphones

