SanDisk Falls 10 Percent As Citi Says 2009 Estimates Too High
Shares of flash memory chipmaker SanDisk (SNDK) are falling $1.89, almost 11 percent, to $15.75 this afternoon following a note by Citigroup analyst Craig Ellis today that says 2009 earnings estimates are in jeopardy for the company because contract prices for flash are plummeting. The stock had shown some improvement of late, rising 18 percent since the end of July as investors speculated that the worst news is over in this year’s collapse in flash prices.
Apparently, it isn’t. Ellis writes that contract pricing in the current quarter looks on track to fall 22 percent, “worse than our SanDisk royalty model [of] down 10 percent.” As a result, Ellis says product gross margin for the fourth quarter of this year and for all of next year could be 1 to 3 percentage points lower than the Street’s modeling.
