SanDisk results top expectations, shares rise

By Gabriel Madway

SAN FRANCISCO (Reuters) - SanDisk Corp posted quarterly results and gave an outlook that topped Wall Street expectations, as demand and prices of flash memory chips improved, sending shares up 9 percent.

SanDisk said product demand is holding up, and it expects pricing to be stable to slightly higher in the current quarter. Prices for NAND flash memory, found in cameras, cellphones and digital music players, had been hurt by oversupply and weaker demand for consumer electronics.

Chief Executive Eli Harari said he expected demand growth to continue in the second half of the year, particularly for mobile and portable computers. At the same time, SanDisk said it would continue to pare costs as it focuses on profits.

"Although this downturn is by no means over, things do look and feel better now than at the beginning of the year," Harari said on a conference call.

SanDisk, which competes with Samsung and Hynix in the NAND flash memory market, forecast revenue for the June quarter of $650 million to $725 million, above analysts' average forecast of $575 million, according to Reuters Estimates.

Chief Financial Officer Judy Bruner told Reuters SanDisk began raising prices in the first quarter and expects the positive impact to be felt more in the current quarter.

"In the last three years in the industry, prices have come down faster than costs and what you see happening here is a correction in terms of pricing, which is largely the result of pretty significant cutbacks in the rate of supply growth."

SanDisk was mum on its plans regarding a possible capital raise, which slammed shares when it was announced in February. At the time, it said it might undertake an equity offering that could dilute shares by as much as 20 percent.