SanDisk: Despite Completing Sale to Toshiba, Still Causing Anxiety

Flash memory chip maker SanDisk (SNDK), which is expected to report earnings after the bell today, announced this morning it will sell 30% of the manufacturing capacity at its NAND flash chip making joint venture to its partner in that venture, Toshiba (TSHTF.PK). “The move will significantly reduce SanDisk’s capital spending, further strengthen its balance sheet and reduce NAND flash memory production commitments,” said the company in its press release. “SanDisk expects to receive cash and reduce equipment lease obligations by approximately $1 billion through this transaction,” it said.

The early read on this is, it ain’t enough. SanDisk will still invest 50-50 with Toshiba in other factories the two share, which means, in analysts’ view, it still will have a financing problem. Caris & Co. analyst Betsy Van Hees writes that, “Toshiba [is] Only Interested in JV Fab,” the “only” here indicating that there’s some disappointment Toshiba isn’t taking more expenses off of SanDisk’s hands. Needham & Co. analyst Edwin Mok writes this morning that, “We believe this confirms our view the Toshiba will not be the “white knight”, but a fab buyout will make SanDisk more attractive to Samsung (SSNLF),” referring to rumors that Samsung may buy out SanDisk. Both analysts offer pretty bleak expectations for SanDisk’s quarterly report this evening, with Mok writing, “SNDK’s businesses are suffering from a double dose of share loss in emerging markets and consumer spending slowdown in developed countries. As a result, we expect 3Q/4Q08 numbers to come in below expectation.”

SanDisk shares today are down $1.56, or 10%, at $13.95.

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Toshiba Reports Losses for Quarter

Stock Quote:


Toshiba on Thursday reported losses for the last quarter, and Nintendo lowered its profit forecast, as the current earnings season revealed the extent of the erosion in corporate and consumer demand.

The figures announced Thursday showed the bulk of the bleeding is taking place in its key electronics division.


Toshiba announced an operating loss of 158.8 billion yen for the quarter, down from a profit of 42.1 billion yen a year earlier, and far worse than analysts had expected.

Toshiba also warned that, for the full year ending March, it now expected an operating loss of 280 billion yen, rather than the 150 billion yen profit it had previously forecast.

Feb 04 08:43 AM