In stark contrast to Sanyo and Sony, who have both lowered their sales predictions for 2004 (see below), SanDisk have just announced record results for the current financial quarter.

SanDisk Press Release

SanDisk today Announced that they have posted record 4Q Operating Income and revenues ($549 million). Unit sales are also up 45% and Megabytes are up 110%. Gross Margin increases to 32% and Operating Margin is at 23%. They put the increases down to strong interest by the market in Digital Cameras, Mobile Handsets, Digital Audio Playeras and Flash Drives.

Total revenue for fiscal 2004 was $1.8 billion, up 65% from $1.1 billion in 2003. Product revenues were $1.6 billion, up 63% from $1.0 billion in 2003. License and royalty revenues were $174 million, up 79% from $97 million in 2003. Net income was $267 million, up 58% from net income of $169 million in 2003. The provision for income tax was 37% for 2004 compared to 30% in 2003. Fully diluted earnings per share for fiscal 2004 were $1.44, compared to $1.02 in 2003.

“SanDisk experienced outstanding results in our fourth quarter due to strong demand for our products in digital cameras, USB flash drives, mobile handsets and our new line of flash digital audio players,” said SanDisk CEO Eli Harari. “In the fourth quarter we sold 110% more megabytes than in the prior quarter by successfully shifting consumer preference to our higher capacity cards. Higher yields on our 90-nanometer NAND/MLC, and higher unit volumes allowed us to aggressively reduce our costs and improve operating margins by almost 3% in the quarter despite a 34% sequential decline in the average price per megabyte.”

“In 2005 we will continue our focus on three areas. First, driving growth in our target consumer and handset markets, including the new storage opportunities in handsets, flash digital audio players, video games, second generation intelligent flash drives, and crypto-secure cards. Second, building our brand and expanding our global sales channels beyond 100,000 storefronts. Third, executing the transition of our captive volume production from 90-nanometer to 70-nanometer NAND/MLC, as well as ramping the new 300-millimeter flash fab, both currently scheduled to commence in the second half of 2005. I am optimistic about the rapidly expanding and pervasive use of our storage technology and products in numerous emerging markets and applications over the next several years.”

Financial Results and Highlights

• Revenue was a record $549 million in the fourth quarter, up 35% sequentially and 41% year-over-year.
• Megabytes sold in the fourth quarter increased a record 110% sequentially and increased 228% year-over-year. Total megabytes sold in 2004 were approximately 167% higher than in 2003.
• Units sold in the fourth quarter increased 45% sequentially and increased 55% year-over-year. Units sold in 2004 were 53% higher than in 2003.
• Average density per card sold in retail increased to 356Megabytes (MB) in the fourth quarter from 254MB in the third quarter. Average density per card doubled from the fourth quarter of 2003 to the fourth quarter of 2004.
• Average price per megabyte sold in the fourth quarter declined 34% sequentially and 56% from the corresponding quarter in 2003. Total average price per megabyte sold in 2004 declined 38% from 2003.
• Product gross margin in the fourth quarter was 32%, compared to 29% in the third quarter of 2004 and 36% in the fourth quarter of 2003.
• Operating income was a record $126 million, or 23% of revenues, compared to $84 million, or 21% of revenue, in the prior quarter, and $109 million, or 28% of revenues, in the fourth quarter of 2003. Operating income for 2004 was $419 million, up 63% from operating income of $257 million in 2003, and operating margin was consistent in both years at 24%.
• Digital Audio Players were successfully launched during the holiday season.
• Greg Rhine joined SanDisk as Senior Vice President, Worldwide Sales.
• Storefronts grew to more than 100,000 from 60,000 at the beginning of the year.
• SanDisk’s revenue share for the US Memory Card Market grew to 46% in the fourth quarter of 2004 from 38% in the fourth quarter of 2003 and USB flash drive share increased to 38% from 22% for the same periods according to data from NPD Techworld, a division of the NPD Group.
• SanDisk acquired MDRM to accelerate development of end-to-end solutions for distributing secure content through flash memory devices.
• Flash Partners, a Toshiba and SanDisk venture, secured lease financing agreements for manufacturing equipment to be installed in the new Fab 3.