AllThingsD » SanDisk

Apple Joins the Flash Madness Club With Anobit Deal

Arik Hesseldahl — Tue, 20 Dec 2011 19:58:39 +0000

Apple appears to have closed its deal for the Israeli flash-memory concern Anobit.

Apple isn’t commenting and is officially treating all this as rumor and speculation (it rarely comments on acquisitions, anyway). But the deal is being reported in Israeli newspapers, and the office of Israeli Prime Minister Benjamin Netanyahu tweeted a welcome message to Apple today, which sure feels like confirmation. So I’ll proceed under the assumption that the reports of this acquisition are true.

Welcome to Israel, Apple Inc. on your 1st acquisition here. I’m certain that you’ll benefit from the fruit of the Israeli knowledge.

December 20, 2011 2:55 am via webReply RetweetFavorite

@IsraeliPM

The PM of Israel

That makes this a cause for celebration. With the Anobit buy, Apple is now the latest member of the Flash Madness Club, which I created over the summer, in the wake of the Fusion-io IPO and other activities by notable flash-technology companies like Violin Memory, Pure Storage and Qwilt.

So why is Apple willing to throw down a reported half-billion dollars on this company? It’s because flash memory has a fundamental problem: As it ages, its ability to store data wears off. This problem is sometimes compared to the semiconductor equivalent of Alzheimer’s. Individual cells on the flash-memory chip lose their ability to store the individual ones and zeros that make up the pictures and music and other data they may be storing, especially after millions of read-and-write operations — the act of putting data on the chip and then loading it from the chip for use. After a lot of heavy use — this can vary depending on the chip — the chips begin to suffer problems with “endurance.”

As flash starts to show up in data centers and PCs and other places beyond consumer gear like iPhones and iPads, this becomes a more important problem. If your iPad gets old enough to suffer data-endurance problems, it’s a pretty simple matter to replace it. But in the more rigorous world of an enterprise data center, where millions of reads and writes will be done on a chip daily, data endurance is a potentially very expensive problem. In the enterprise, a solid-state drive is considered suitable only if it can stand up to five full-drive write cycles, where the drive is filled to capacity and then erased every day for five years.

Anobit’s solution to these problems involves techniques known as memory-signal processing and the use of some secret-sauce memory-processing error-correction algorithms, plus some management tricks for moving data around a flash chip in more efficient ways, in order to make them last longer.

It’s also the sort of problem that a company like Apple — which is the world’s largest consumer of flash memory, and has been for several years — would want to solve. Think of the many places where Apple uses flash — the iPad, iPhone, iPod, MacBook Air and Apple TV. And those are just the products we know about, so far. Flash can’t help but appear in many more products.

On top of that, flash technology plays a significant role in Apple’s data centers. Fusion-io, the company that builds flash-based insert cards that speed up garden-variety servers, has named Apple as a significant customer, so there’s plenty of flash inside Apple’s facilities in North Carolina. Flash endurance can’t help but be a problem Apple might face with its iCloud service, for example.

Israel has a big connection to the flash industry. SanDisk’s founder, Eli Harari, is Israeli; a few years back SanDisk acquired an Israeli company called Msystems, which, if my memory serves, was the first to popularize what we now call a thumb or keychain drive. So, historically, there have been a lot of useful innovations on flash memory that have come out of that country. Supposedly, the deal calls for Apple to open a research center there, so it will get the benefit of ongoing innovations on flash. Chances are it’s going to need a few.

Eye-Fi Partners With SanDisk to Expand European Distribution

Ina Fried — Wed, 14 Sep 2011 13:00:46 +0000

Eye-Fi, whose chips bring wireless capabilities to standard digital cameras, plans to work with flash memory chipmaker SanDisk to sell memory cards in Europe.

SanDisk will sell co-branded four gigabyte and 8GB memory cards that are similar in features to the company’s current entry-level products.

Though the partnership is initially centered around SanDisk selling co-branded Eye-Fi chips in Europe, CEO Yuval Koren notes that it opens the door for the two companies to work together more closely down the road.

“We really see this as the beginning of a deeper partnership,” Koren said in an interview, noting the deal has been some time in the making.

Although Eye-Fi had been distributing its memory cards in a few European countries, such as Germany, France and the United Kingdom, its efforts had been limited in scale.

“They are obviously going to take a much broader approach to that,” Koren said. With the deal, Eye-Fi plans to transition from selling its own brand cards in Europe.

Seven Questions for Asheem Chandna of Greylock Partners

Arik Hesseldahl — Mon, 01 Aug 2011 23:19:03 +0000

It’s not every day that the chief executive of a publicly held company leaves for a start-up, and so today’s hiring of Verisign CEO Mark McLaughlin by the network security start-up Palo Alto Networks, which The Wall Street Journal reported today, is notable by that measure alone.

The start-up, backed by Greylock Partners, Sequoia Capital, Globespan Capital Partners and Jafco Ventures, tapped McLaughlin in a sign that it is gearing up for an IPO. I talked today with Asheem Chandna, a Palo Alto Networks director and partner at Greylock, about the new hire and about the crazy growth the company is going through right now.

AllThingsD: Asheem, I always ask people to start at the top: What is Palo Alto Networks and what does it do?

Asheem Chandna: We’re in the network security space. We build next-generation firewalls technologies. We ship an appliance that contains some subscription services on it so in a way it combines the business model of Cisco with that of Salesforce.com.

And how big is the business?

We disclosed that we’re on a run-rate to $200 million in revenue, and we have 4,500 customers. We’re cash-flow positive for the past five quarters, and we’ve been shipping product for 16 consecutive quarters. We have about 450 employees in the company today and we expect to add another 350 in the coming 12 months.

So you have more than 4,500 customers. Can you name any? Security companies are often reticent to do that.

We have many we can name, several of which we’ve done seven-figure deals with. Some we announced today: Qualcomm, eBay, Verisign, Cricket, the Los Angeles Community College district. Others we’ve named before include SanDisk and Constellation Energy.

And what prompted you to hire Mark McLaughlin from Verisign? Was it him or was it his experience at Verisign that got you interested?

What we were really focused on was leadership capability, what Jim Collins would call a Level 5 leader and the raw IQ, intensity and discipline. We’ve known Mark for several years, he’s an exceptional leader and one of the best leaders I personally know.

How did the search go down?

We had a search under way for eight months. It’s taken that long because this is a one-in-a-decade company. It’s one of the fastest growing companies in enterprise IT. We were deliberate and focused on really finding the right person, who would be a good cultural fit with the team. We hired Russell Reynolds to help us with the search. We reviewed more than 150 people in detail, and interviewed more than two dozen people. There were many senior executives at public companies who were interested in this position.

Every security company tries to solve a particular problem, and my understanding is that Palo Alto Networks can detect traffic coming from certain applications. So when I’m signed into Facebook or Tweetdeck or Skype on a network where your gear is in use, you can detect it and watch out for good and evil traffic on those applications, and block the bad traffic. Is that right?

Exactly. That’s one of the three basic innovations that are our bread and butter. The one you just described is really our headline feature. We can uniquely identify applications and users as they pass through the firewall and the network. The second is around malware. We can scan for malware at very high speeds, which is also something that hasn’t been done before. Finally, we collapse multiple network functions that are usually done on individual appliances into one large system but without a degradation of performance. We do Web filtering and intrusion detection, which are traditionally done on separate network appliances. Network administrators are struggling with appliance fatigue. We are giving them the ability to roll all those things into a single appliance with no degradation of performance.

So, since everyone is going to start asking: When are you going public? Are you going to be hiring bankers soon?

We haven’t set a date for any of that yet. The focus is really to build and grow the company to the next level. Going public is just another milestone. We want to be the biggest independent network security company in the industry.

HP's TouchPad Teardown: Its Deepest Secrets Revealed

Arik Hesseldahl — Sun, 03 Jul 2011 21:26:41 +0000

What would the release of a headline-grabbing new consumer electronics device be without a handful of people buying them only to take them apart to see what’s going on inside?

So it goes with Hewlett-Packard’s TouchPad, the webOS-based answer to the king of tablet computing, Apple’s iPad. The teardown team at market research firm IHS iSuppli picked one up only to skulk around its insides. The picture at right (which you can click to make bigger) is the exploded view of the device.

ISuppli isn’t the only place that does these teardown reports, but it’s one of the few that also estimates the combined cost of the parts and materials used to build the device. These bills of materials, or “BOM” estimates, as they’re called in industry parlance, are important indicators of the kind of profit margin a company can expect to see on a device on a per-unit basis. The BOM doesn’t take into account other costs that are impossible to estimate, such as software development, licensing of any intellectual property, distribution or marketing.

So what does the TouchPad cost to build? The teardown by iSuppli pegs the cost of the components used in the 16 gigabyte version, which sells for $499 at retail, at $306.65. Meanwhile, the 32GB version, which sells for $599, costs $328.65 to build. (The difference, obviously, is memory.) HP didn’t immediately comment on iSuppli’s findings.

As is often the case with tablets and notebooks, the display is the most expensive component in the device. In this case, HP went with a proven winner. It selected a 9.7-inch display from LG Electronics that is thought to be either identical or very similar to the LG-made display Apple used in the first-generation iPad. Andrew Rassweiler, iSuppli’s senior director for teardowns, pegged the cost at $69.

Internally speaking, the similarities to the iPad end there, Rassweiler told me. The components connected to the display that enable the touch-sensitive interface are different from those on the iPad. Where Apple has favored chips from Broadcom and Texas Instruments, HP has gone with a set of six chips from Cypress Semiconductor to control the touchscreen. It costs $11.75, which makes it one of the more expensive touchscreen driver products on the market, Rassweiler said. Additionally, materials used to build the capacitive glass assembly that overlays the LCD display cost another $63.50. All in, components related to the display come to a subtotal of $144.25, iSuppli estimates.

The next most expensive set of components is the memory. For the NAND-flash memory used for storing data, HP selected SanDisk’s iNAND chips. The iSuppli teardown reckons that HP paid $23 for 16GB, and $45 for 32GB. Samsung provided 8GB worth of system memory (DRAM) for both models, at an estimated cost of $26.

he TouchPad’s main application processor is interesting both for who made it — Qualcomm — and for what it isn’t: A full-fledged member of its Snapdragon chip family. “This appears to be a Snapdragon derivative without the baseband functions that would normally be seen on a Snapdragon,” Rassweiler told me. The chip costs $20, iSuppli estimates. Chances are a fully enabled Snapdragon chip will be used in a future model, he said.

For now, as The Wall Street Journal’s Walt Mossberg noted in his review of the TouchPad last week, the device is Wi-Fi only, but a model with the ability to connect to cellular networks is planned.

It’s also clear from the teardown, Rassweiler said, that there’s room for the addition of other components in the future. And other things are missing.

“We noticed there’s a gyroscope chip and an accelerometer, but we couldn’t find any GPS chips,” he said. “Plus, when we looked at the design we noticed there seems to be a lot of breathing room inside to add additional parts without having to change the design.” More stuff to expect from a future 3G-ready TouchPad.

Qualcomm supplied several other chips. Its newly acquired Atheros subsidiary provided the Wi-Fi chips, at a cost of $2.60, and two power management chips that cost another $5 combined. Texas Instruments supplied four chips — three related to power management and one display interface chip — that added $4.50 to the cost.

Of course, the TouchPad is not only intended to be a successful device on its own for HP, but represents a new strategic opportunity. As in, HP wants to license the webOS on the TouchPad to other manufacturers.

That makes it something of a showcase for the software’s capabilities. HP CEO Léo Apotheker discussed this possibility in his appearance last month at the ninth D: All Things Digital conference.

You can see his comments on the subject from the highlight clip below. And you can see the full interview here:

[ See post to watch video ]

Samsung's Chromebook Torn Down, Costs $322 To Make, iSuppli Says

Arik Hesseldahl — Mon, 13 Jun 2011 12:50:52 +0000

The picture at right is what a Samsung Chromebook looks like once it’s been taken apart. The new Google-powered notebook, formally called the Series 5, along with a similar one from Acer, will go on sale Wednesday with a Wi-Fi only version, costing $430, the other with built-in 3G wireless access for $500.

The Chromebook line is Google’s first big hardware bet on its cloud-centric Chrome operating system, which is essentially a Web browser capable of running applications that are hosted in the cloud. The point of doing that is that it takes the hassle and the cost of maintaining the software out of the hands of the person or business using it. Google thinks that over the long term it has a chance to erode Microsoft’s dominance of enterprise notebooks.

So what goes into building one? The teardown experts at IHS iSuppli took a look at the 3G version, and have shared their findings with AllThingsD. I talked with analyst Wayne Lam, who worked on the teardown. While you might expect it to essentially be a stripped-down build with as little emphasis as possible on the hardware, it’s actually an interesting study in what can happen when there’s no payment to Microsoft built into the cost assumptions, Lam told me. Added up, the components used cost a total of $322.12.

Since the hardware requirements for storage and memory are lighter, Samsung was able to spend more on hardware that improves the user experience like the display, the battery and the outer enclosure. “The lower overhead in hardware allowed Samsung more leeway on things that people will notice, like a bigger screen and a bigger battery,” Lam said.

The most significant batch of component costs is found on the motherboard (pictured top and bottom, click the images to make them bigger), amounting to $86.37 or about 26 percent of the overall hardware cost. The Chromebook’s microprocessor is a dual-core Intel Atom N570. Samsung, which is the world’s largest manufacturer of memory, supplied its own DRAM chips. Also on the motherboard are power-management chips from Texas Instruments and Intersil.

German chipmaker Infineon supplied a Trusted Computing Platform chip, which is interesting because this is something usually seen in enterprise-level servers and not personal notebooks. The chip helps protect the system by running a thorough security check every time the system is booted up, ensuring that the hardware hasn’t been tampered with and that unwanted software hasn’t been added. Given the bet that Google has made on the cloud, and the attacks it has been fending off of late, this is an understandable move.

Samsung also used its own shop to supply the display. It measures 12.1-inches diagonally and features an improved light-emitting diode technology that boosts its overall brightness. Lam says the display cost $58 and is the second most expensive component in the Chromebook.

The third most expensive component is the battery, which Samsung supplied as well. A key part of the Chromebook experience is long battery life. Samsung opted for a six-cell battery pack that is intended to last all day. It added $48.20 to the hardware cost.

Wireless chips combined for the fourth most expensive set of costs. Hon Hai Precision Technology, the Taiwanese contract manufacturer that’s better known to the world as Foxconn, built the 3G wireless module using four chips from the wireless chipmaker Qualcomm. In order to keep costs down, Samsung opted to use an older Gobi 2000 baseband chip. Wireless chips added $42.85 to the hardware cost. Qualcomm’s newly acquired Atheros unit supplied a Wi-Fi chip.

A few other interesting points that Lam found during the teardown. The memory chips are soldered on to the motherboard, meaning that the computer’s memory isn’t upgradeable by the user as it is on most PCs. It ships with 2GB of memory on board; if you’re a business or educational user paying a monthly subscription fee, by the time you start thinking you may need more memory, it will probably be ready for a hardware refresh. Google is taking even that level of routine management — plus the associated cost — out of your hands. Is the world ready for that?

SanDisk, Seagate Debate Data-Storage Future

Don Clark — Tue, 11 Jan 2011 00:00:40 +0000

Many questions have been raised by consumers’ shifting focus to smartphones and tablet-style PCs. Sanjay Mehrotra seems to like answering them a bit more than Steve Luczo.

Luczo is CEO of Seagate, the big maker of computer disk drives. Mehrotra was recently given the top job at SanDisk, which holds a similarly strong position in the chip-based data-storage medium known as flash memory. They talked about their businesses during separate interviews at the Consumer Electronics Show.

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Flash Memory Continues Growth By Shrinking

Don Clark — Thu, 19 Aug 2010 07:00:31 +0000

Many consumers have gotten accustomed to the benefits of flash memory, the chips used to store images, music and other data in pocket-sized gadgets. More technology improvements are on the way–the latest sign that small is beautiful in Silicon Valley.

SanDisk, a pioneer in the field, helped popularize familiar items like thumb drives and memory cards that use flash chips. The company is talking up an advance in another category–devices that are designed as replacements for the hard drives in PCs.

Most such solid-state drives, or SDDS, are housed in modules that are about the same size as disk drives. SanDisk on Wednesday unveiled what it called an integrated SSD, or iSSD, which looks more like a single chip (though it is actually a package with multiple chips stacked on top of one another). SanDisk says it is smaller than a postage stamp, weighs less than a paper clip and is designed to be soldered on to a PC motherboard rather than plugged into hard drive-type connectors.

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Live from Apple's "Let's Rock" Event: iPod Updates, Games, Nano Video Cameras

John Paczkowski — Wed, 09 Sep 2009 17:33:38 +0000

Apple has sold some 225 million iPods to date, making it one of the most popular electronic devices ever. And it’s sure to sell even more after the updates the company announced at this morning’s event. Among them: Larger, cheaper iPod touches and nanos with cameras and FM radios.

Following introductory remarks by Apple (AAPL) CEO Steve Jobs, Phil Schiller offers details, noting that “the iPod has 73.8 percent market share. The next biggest category is ‘other,’ and after that, SanDisk and then Microsoft pulling up the rear.”

Schiller adds that Apple has sold 20 million iPod touches since the device debuted. He runs through a lengthy sales pitch for the iPod touch, touting it as a killer pocket computer and taking potshots at rivals like Dell (DELL) along the way.

Moving on to games, Schiller notes the discrepancy between the number of games on gaming platforms like the Nintendo DS and the iPod touch. The iPhone OS, he notes, has 21,178 games. The DS has just 3,680. Point taken.

Moving on to some new game demos now. First up: Ubisoft with Assassin’s Creed 2, which, we are told, is “all about visceral combat, brutal hand-to-hand combat and one-shot kills.” Behind the presenter, a warrior is mercilessly beaten into submission.

Schiller returns to the stage, “Boy, that looks like fun.”

Tapulous, the developer of Tap Tap Revenge, and Gameloft, follow, both introducing new games. Gameloft’s Nova–a first-person shooter with multiplayer option–seems a far more compelling effort than Tapulous’s Riddim Ribbon, which appears to be a Black Eyed Peas-heavy variation of Tap-Tap.

Up next, Electronic Arts, which is apparently headlining the games section of today’s event. EA’s Travis Boatman takes the stage to introduce Madden NFL 10. The game boasts both custom-kick and draw-a-play-on-screen features developed specifically for the iPhone OS. Madden NFL 10 is available today.

Schiller again returns to the stage. “The iPod touch is the most affordable gateway to the App Store,” he says, adding that $199 is a “magic price point” in the iPod market.

With that, he announces the iPod touch price cuts we heard about earlier this morning: An 8GB model for $199, 32GB for $299, and 64GB for $399. All three devices are significantly faster, says Schiller. Interestingly, none seem to feature that rumored camera.

Price drops as well for the nano, but we knew about these. Apple has dropped the price of the iPod shuffle as well: $59 and $79. And the company is offering them in a new selection of colors. Plus, there’s a special edition of the shuffle crafted from stainless steel.

Steve Jobs returns to the stage. So those are the iPods, but there is one more thing: A video camera. He talks about the exploding video market, mentions the Flip, etc. “We want to get in on this market as well and we’re doing it for free….Boy, this really is the new Apple,” he quips.

Yes, the iPod nano does indeed now feature a video camera. The video quality looks impressive. Whoa: Apple has also added FM radio, a voice recorder and a pedometer to the nano. New polished anodized aluminum colors. 8GB model for $149, 16GB model for $179.

After a few concluding remarks about the new iPod lineup, Jobs announces what has become an annual tradition at these events: A live performance. Today’s artist: Norah Jones.

The end of her set concludes today’s event. No iPlatform. No Beatles on iTunes. But lots of product refreshes, software intros, and price cuts. Plus: Steve Jobs is definitely back.

Live from Apple’s “Let’s Rock” Event

iPod Updates, Games, Nano Video Cameras

iTunes 9, iTunes LP, Home Sharing, Genius Mixes

Steve Jobs: “I’m Vertical, Back at Apple and Loving Every Day of It”

Event Photos by Adam Tow

Live from Apple's "Let's Rock" Event: iPod Updates, Games, Nano Video Cameras

John Paczkowski — Wed, 09 Sep 2009 17:33:38 +0000

Schiller returns to the stage, “Boy, that looks like fun.”

Schiller again returns to the stage. “The iPod touch is the most affordable gateway to the App Store,” he says, adding that $199 is a “magic price point” in the iPod market.

After a few concluding remarks about the new iPod lineup, Jobs announces what has become an annual tradition at these events: A live performance. Today’s artist: Norah Jones.

The end of her set concludes today’s event. No iPlatform. No Beatles on iTunes. But lots of product refreshes, software intros, and price cuts. Plus: Steve Jobs is definitely back.

Live from Apple’s “Let’s Rock” Event

iPod Updates, Games, Nano Video Cameras

iTunes 9, iTunes LP, Home Sharing, Genius Mixes

Steve Jobs: “I’m Vertical, Back at Apple and Loving Every Day of It”

Event Photos by Adam Tow

Sambus?

John Paczkowski — Fri, 04 Sep 2009 16:39:54 +0000

A quick update on the Samsung/SanDisk story I posted earlier this morning. Now that Samsung has officially called off its bid for Sandisk, shares of Rambus (RMBS) are trading higher on a rumor that it might soon be the target of Samsung’s attentions. The company’s stock spiked more than nine percent to $17.49 on the speculation, though analysts say such a deal is unlikely.

So Much for SamDisk

John Paczkowski — Fri, 04 Sep 2009 12:57:34 +0000

It was fun while it lasted, but Samsung has abandoned its bid to buy SanDisk. In a regulatory filing made nearly a year after its $5.85 billion offer for SanDisk (SNDK) was rejected as too low, Samsung officially called off the effort, which, had it been successful, would have combined two of the largest flash memory producers into a single NAND monstrosity that would have dominated the industry.

“We are no longer planning to pursue the acquisition as there has been no progress since we withdrew our offer as of Oct. 22, 2008,” the company said in a filing with the Korea Exchange. The announcement comes after the two companies inked a new seven-year NAND flash-memory license agreement, one that will see Samsung paying about half the royalty amount it paid previously.

SanDisk: Stifel Sees Upside, Auriga Reiterates "Sell"

Tiernan Ray — Wed, 22 Jul 2009 00:03:06 +0000

Strength in the NAND flash memory chip market, and from Apple’s (AAPL) iPhone in particular, should help SanDisk (SNDK) beat expectations when it reports Q2 earnings when it reports tomorrow, according to a note today from Stifel Nicolaus analyst Patrick Ho.

Ho doesn’t formally cover SanDisk: he’s more interested in the implications for some of his coverage companies, including Teradyne (TER) and Verigy (VRGY), both of which he rates “Buy.” Those two companies make chip test equipment.

“We believe the company (and the overall NAND flash market) has seen a pickup in handset demand, as well as continued strength in many Apple-based products (including the iPhone 3G S),” writes Ho.

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SanDisk: Needham Turns Bearish; NAND Glut Looming?

Eric Savitz — Thu, 18 Jun 2009 13:37:46 +0000

SanDisk (SNDK) shares are coming under pressure this morning after Needham analyst Y. Edwin Mok cut his rating on the stock to Under Perform from Hold.

Mok writes in a research note that the downgrade reflects “early signs of weakness in the NAND flash memory sector that we believe will lead to lower prices.” He contends checks find that NAND product inventories have increased substantially, and that demand in both the retail and OEM channel has slowed since May. Heading into the second half, he writes, “we are concerned that production ramps”–Mok expects higher output from both Samsung and Toshiba–“will swing the NAND sector into oversupply.”

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Oh No Moto

John Paczkowski — Tue, 03 Feb 2009 21:57:23 +0000

[ See post to watch video ]

Atheros Q1 Forecast in Line, Stock Jumps Five Percent

Eric Savitz — Tue, 03 Feb 2009 12:45:48 +0000

Good chip company, bad chip company: While SanDisk (SNDK) shares plummet 14 percent following a much-worse-than-expected Q1 outlook, Atheros Communications (ATHR) is up nearly five percent in after-hours trading at $12.68.

During a conference call with analysts following a better-than-expected fourth-quarter report, wireless chipmaker Atheros this evening forecast Q1 sales to fall 12 to 18 percent, which would be a range of $80.61 million to $86.5 million. The Street has been looking for $85 million. The company expects gross profit margin to come in between 48.5 and 49.5 percent, not far from the 49.2 percent of Q4. Operating expenses will fall one to three percent, quarter to quarter, the company said, to $39.5 million to $49.5 million. The company forecast profit per share of three cents to five cents, which is in line with expectations at the top end.

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And the Award for Most Appalling Earnings Performance in a Recession Goes to…

John Paczkowski — Tue, 03 Feb 2009 08:00:09 +0000

SanDisk CEO Eli Harari says the company is “very disappointed” with its fourth-quarter bottom-line results, which doesn’t even begin to describe the way the company’s investors must be feeling right now. They had expected the flash memory card maker to report a fourth-quarter net loss of 60 cents a share on revenue of $766.7 million. Instead, the company reported an adjusted net loss of $1.65 a share.

And thank God for that adjustment. Because without it, SanDisk’s Q4 loss weighed in at a porcine $1.86 billion, or $8.25 a share, thanks to a $1.02 billion pretax goodwill and intangible asset impairment charge.

Suffice to say, SanDisk (SNDK) isn’t optimistic about its prospects in the months ahead. “First Quarter and 2009 visibility continues to be poor as seasonally soft demand is being aggravated the global recession,” Harari said in an earnings release. “With dismal Q4 and 2008 results reported by all Flash competitors, the Flash industry is at a crossroads. Three consecutive years of price reductions exceeding cost reductions have squeezed profitability out of this industry, even for the most competitive suppliers and this has been exacerbated by the global economic recession. Although 2009 is shaping up to be another tough year, we are very encouraged by the deep production cuts by the industry that we see as leading to the return of balanced demand and supply and improved pricing environment and much healthier growth for the survivors in 2010 and beyond.”

Key word here being “survivors.”

Toshiba Suspends NAND Production at Two Plants

Eric Savitz — Fri, 05 Dec 2008 17:17:16 +0000

Toshiba has suspended NAND flash memory production at two plants for nine days due to weak demand, according to Reuters, which picked up the story from broadcaster NHK. The wire service said the company denied plans to shut down all operations at the two factories in Yokkaichi, in western Japan, and Oita, in southern Japan. The Yokkaichi factory is a joint venture with SanDisk (SNDK).

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SanDisk Rallies as Takeover Rumors Resurface

Eric Savitz — Thu, 04 Dec 2008 00:51:37 +0000

SanDisk (SNDK) shares are on the rise on rumors that Toshiba might be planning a bid for the company, according to Dow Jones Newswires. The two companies have a joint venture to manufacture NAND flash memories, and Toshiba has been often rumored to be a logical partner for the flash memory chipmaker.

In October, Samsung withdrew a $26-a-share bid for SanDisk; there was speculation before Samsung pulled its offer that Toshiba might serve as a white knight for SanDisk.

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SanDisk Rallies; Goldman Calls It Too Cheap to Ignore

Eric Savitz — Mon, 03 Nov 2008 19:55:35 +0000

SanDisk (SNDK) shares have received a boost today from Goldman Sachs chip analyst James Covello, who added the stock to the company’s Buy list with a $13 price target.

He writes that the stock’s valuation “is now too attractive to ignore.” He notes that the stock has fallen out of favor after Samsung pulled its $26-a-share takeover bid, but that “SanDisk retains some of the key IP in the NAND industry, which we believe is worth significantly more than what is priced into the stock today.” He says that if the company successfully renegotiates a license agreement with Samsung, even with a 50 percent reduction in royalty rate, the stock would be worth close to $20, even if you assume zero value for its card business and give them zero credit for balance sheet cash.

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SanDisk Shares Plunge as Samsung Withdraws Takeover Bid

Eric Savitz — Wed, 22 Oct 2008 16:39:34 +0000

SanDisk (SNDK) shares are sharply lower this morning after Samsung withdrew its offer to acquire the company.

In a letter to SanDisk disclosed late yesterday, Samsung Electronics CEO Yoon Woo Lee said he is “disappointed” that the two companies could not reach an agreement. Here is the key part of the letter:

After nearly six months of efforts to pursue a transaction with no meaningful progress, we are withdrawing our proposal to acquire SanDisk. I am disappointed that we have been unable to reach an agreement on our proposal. I continue to believe that a combination of our two companies would have created a superior global brand, an unparalleled technology platform and the scale and resources to drive convergence in the marketplace.

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Grave New World

John Paczkowski — Mon, 22 Sep 2008 19:00:12 +0000

[ See post to watch video ]

1982 Called. It Wants Its Digital Music Distribution Model Back

John Paczkowski — Mon, 22 Sep 2008 15:29:37 +0000

Overall CD sales are plummeting after eight years of unflagging erosion. Digital music sales now account for 15 percent of recording industry’s revenues worldwide and 30 percent in the United States, according to recent data from the International Federation of the Phonographic Industry. And those numbers are climbing faster than ever. Consider: This past June, Apple (AAPL) said it has sold some five billion songs on its iTunes Store. Clearly, physical media are giving way to the Internet as a means of music distribution. What better time, then, to reinvent the music industry’s business model for physical media as SanDisk (SNDK) hopes to do with its new microSD memory card album format?

This morning the company announced slotMusic, a compact memory card-based music format that can be played on cellphones, PCs and some MP3 players. It relies on MP3s without digital rights management schemes and is backed by Universal Music Group, Sony BMG Music Entertainment, Warner Music Group and EMI Group, all of which apparently believe that more physical media is the best way to reinvent their business model in the era of digital distribution. Though as SanDisk VP Daniel Schreiber notes, they do have their reasons. “There’s a billion phones out there and a lot of them can play music and a lot of them have a microSD slot,” he explained. “We think there’s still a need for a tangible, physical product. People will appreciate walking out of the store playing music on their phones.”

Perhaps. But will they appreciate carrying that music around on a 0.6? x 0.4? medium that’s about the size of a fingernail? Seems easy to lose, doesn’t it (maybe Case Logic is planning a slotMusic binder)? And wouldn’t they rather carry around hundreds of songs, instead of the dozen or so stored on each slotMusic card? And what if the memory card in their phone is already in use, filled up with contacts, applications and other data? What then? And beyond this, haven’t iTunes and Amazon MP3 made consumers more accustomed to purchasing music à la carte? Why purchase a full album at $15, when all you really want are the only two good songs on it?

Toshiba Chops Outlook; Would It Really Bid for SanDisk?

Eric Savitz — Fri, 19 Sep 2008 18:16:45 +0000

In case you happen to think that Toshiba is going to outbid Samsung for SanDisk (SNDK), you ought to take note of the company’s currently grim view of the NAND flash memory market.

In fact, as Bloomberg reports, Toshiba today cut its full-year net income forecast for the March 31, 2009, fiscal year by 46 percent to 70 billion yen, which would be a four-year low. The company also cut its sales projection by 3.8 percent to 7.7 trillion yen, and its operating profit forecast by 48 percent to 105 billion yen.

Toshiba is the world’s second-largest producer of NAND flash memory chips. The company said its semiconductor division will lose 65 billion yen for the year due to weak NAND pricing.

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Samsung and SanDisk Can Learn From Prior Deals

Therese Poletti — Thu, 18 Sep 2008 12:32:08 +0000

Samsung Electronics Corp. and SanDisk Corp. (SNDK) can both learn some useful lessons from other recent takeover battles in the technology sector, particularly the failed merger talks between Microsoft Corp. (MSFT) and Yahoo Inc. (YHOO). The first lesson is for South Korean electronics giant Samsung. Hostile, unsolicited deals do not have a great history of success in the high-tech business. In the past, such attempts were viewed as a dicey path to take to win over a company where many of the assets were the employees, who could walk out the door. They were rarely pursued.

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Who's Your Mergers & Acquisitions Consultant, SanDisk? Jerry Yang?

John Paczkowski — Thu, 18 Sep 2008 11:23:05 +0000

Is SanDisk out of its mind?

On Tuesday the company rejected a $5.9 billion acquisition bid by Samsung Electronics. Apparently, it feels the $26-a-share cash offer–an 80 percent premium over its Monday close–undervalues the company. Which may have been true once upon a time. But now that a supply glut has depressed prices for the memory cards on which its business is built and its shares have lost half their value, well … really, you have to wonder what the company is thinking.

Anyway, Samsung isn’t taking no for answer. In a letter to SanDisk CEO Eli Harari Wednesday, Samsung CEO Yoon-Woo Lee argued that a merger is a financial win for both companies.

Our many meetings and conversations over the last several months have served to confirm for us that a combined Samsung-SanDisk would have a superior global brand, an unparalleled technology platform and the scale and resources to drive convergence in the marketplace. With SanDisk’s innovative culture and technology leadership and Samsung’s scale, leadership in manufacturing and execution, and strong systems and consumer electronics segment knowledge, the combined company would be well positioned to accelerate the adoption of flash memory technology in new markets. We can also establish the platforms and capabilities necessary to position flash as the preferred vehicle for delivery and storage of a wide variety of content, such as film, in a way that would not be possible for either of our companies alone.

As we have seen in recent months, markets have become more turbulent and global economic trends are negative. At the same time the competitive environment remains challenging. To survive and compete in these times we will each need to leverage our resources and rely upon a strong balance sheet to fund critical investment and development through good times and bad. Separately investing in necessary state of the art facilities will be a significant tax on your business in the near term. In addition, reliance on IP and enforcing it is a costly and uncertain business for both our companies. Faced with these challenges, now is the time to merge.

A persuasive argument. But not in the eyes of SanDisk (SNDK), which seems determined to play Yahoo (YHOO) to Samsung’s Microsoft (MSFT) and, in Lee’s words, “continues to cling to unrealistic expectations on both its standalone market value and an appropriate merger price.”