Earnings Preview: SanDisk

SanDisk (SNDK) is expected to report Q1 earnings Thursday with a conference call scheduled for 5:00 pm EST.

Guidance

The consensus estimate is 26c for EPS and $810.92M for revenue, according to First Call. The revenue estimate is up approximately 18% YoY, but down 27% QoQ.

Analyst Views

With SanDisk, all eyes will be on NAND pricing. Amid signs of a slowdown in consumer spending due to the U.S. subprime mortgage crisis, U.S. market researcher iSuppli Corp. last week cut its forecast for revenue growth in the NAND flash memory chip market. The firm now projects global NAND flash revenue of $15.2B this year, up 9% from $13.9B in 2007. It had previously forecast 27% growth for this year. iSuppli's forecast for SanDisk's order growth was also trimmed to 8% from the previous forecast of 33%.

Recently, Lazard Capital's Daniel Amir, who rates SanDisk a Buy, said a new iPhone from Apple (AAPL) will be positive for NAND pricing and flash memory chip makers. Lazard's channel checks indicated that Apple is gearing up for NAND purchasing in Q2 in advance of the June release of the 3G iPhone. Amir believes NAND pricing should begin to firm up as we head into May and demand picks up from Apple. However, take note that when iSuppli cut their NAND forecasts, they thought Apple will likely cut its expected NAND flash consumption this year to $1.4B from $1.6B expected previously, but up from the $1.2B spent in 2007.