Earnings Preview: SanDisk

SanDisk (SNDK) is expected to report Q3 earnings Monday Oct. 20 with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is loss (27c) for EPS and $778.12M for revenue, according to First Call. Guidance was materially lowered for Q3 revenues on the earnings call to $750M to $850M.

Analyst Views

SanDisk shares are trading lower ahead of its earnings report as analysts expect results and commentary to show ample evidence of a slowdown in consumer spending. Thomas Weisel believes SanDisk will report earnings in-line with its below-Street Q3 estimates of a loss (31c) and $753.6M in revenues. Weisel's estimates for Q3 reflect a muted consumer demand environment and a persistent over-supply situation in the NAND industry. Weisel believes SanDisk will guide below consensus for Q4. The firm expects muted consumer demand will likely to depress the outlook. Accordingly, Weisel anticipates that SanDisk could guide below consensus for Q4 which stands at a loss (15c) and $902.62M. Weisel's Q4 estimate is a non-GAAP loss (37c) and $853.7M in revenues. Furthermore, the firm believes investors are likely to focus on the prospect of SanDisk possibly being acquired by Electronics Co. instead of fundamentals.

Analyst Bennet Notman at Davenport & Co. said he is expecting "ugly" results and forecasts from the company, given weak consumer spending and overcapacity in the market for NAND flash chips.

Cowen & Co. analyst Daniel Berenbaum said SanDisk's announcement to to sell Toshiba Corp. about 30 percent of the manufacturing capacity of the companies' joint ventures for cash and reduced equipment-lease obligations, should be help the prospect for a deal with Samsung. Berenbaum said the Samsung-SanDisk deal has been at an impasse because SanDisk is reluctant to allow Samsung to conduct nonpublic due diligence.