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SanDisk profit tops Street view, shares surge

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CIOL Bureau
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SAN FRANCISCO, USA: SanDisk Corp posted a better-than-expected profit, helped by stable pricing for NAND flash memory and cost cuts that boosted its gross margin, and its shares rose 9 percent.

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SanDisk and other NAND suppliers are expected to benefit from a surge in demand for flash in devices such as Apple Inc's iPad, smartphones and other consumer electronics.

But flash memory is a commodity, and suppliers traditionally rise and fall based on pricing and supply-demand dynamics.

SanDisk cited strong demand from companies which embed SanDisk chips in their devices, as well as from consumers in the third quarter, and said stable prices bolstered its bottom line.

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Caris & Co analyst Craig Ellis called the company's gross margin, which came in at a record 52 percent, "stunning."

"You can see all the strength in the gross margin," he said. "They saw significantly better pricing than expected."

The average price per gigabyte sold declined only 5 percent from the second quarter, SanDisk said. Sales and marketing, and general and administrative costs both fell from a year ago.

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Since 2009, SanDisk and its rivals have benefited from tight supply and some price stability, but major players are adding capacity to increase production next year.

The company on Thursday reported net income of $322.1 million, or $1.34 cents a share, in the third quarter ended Oct. 3, up from $231.3 million, or 99 cents a share, in the year-ago period.

Excluding items, SanDisk earned $1.30 a share, above the consensus analyst estimate of $1.05 a share, according to Thomson Reuters, I/B/E/S.

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Revenue rose 32 percent to $1.23 billion, in line with Wall Street's target.

SanDisk is the world's biggest supplier of flash memory cards that are sold to consumers through retailers. But two-thirds of its sales now come from manufacturers, which embed flash in their devices.

Shares of Milpitas, California-based SanDisk closed at $37.12 and rose to $40.52 in extended trading.

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