Stock Option Investment Advice

Flash Memory Brings Huge Profits to SanDisk Corp. (SNDK)

SanDisk Corporation (SNDK), a Milpitas, California based company saw a huge fourth quarter profit boost. The company reported an income of $105.81 million for the fourth quarter, which amounts to 45 cents per share. The news was especially good for SanDisk who experienced a $35.14 million, 17 cents per share, loss during the fourth quarter last year.

The company credited market demand for flash memory as the leading driver of the strong turnaround. Cell phones and digital cameras continue to evolve and see new generations of products, which require flash memory technology provided by companies like SanDisk.

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Strong revenue was another good sign for the company. Revenue jumped from $1.16 billion to $1.25 billion from last year’s fourth quarter. Adjusted income was 69 cents per share, well above the 64 cents per share expectation from Thomson Financial.

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SanDisk does face some challenges moving forward as do many technology suppliers. Many market experts are advising against technology stock investing in their stock market tips. With global economic concerns and recession concerns in the United States, SanDisk must deal with a market place putting downward pressure on pricing.

With over supply in some markets the company supplies, and consumer confidence and spending floundering, pricing has been forced to stay low. As mobile phone and digital camera companies struggle to sell products at reasonable prices, their troubles are passed on to suppliers of their technology, like SanDisk. These potential supply and demand issues could lead to stock warning signs.

The company is looking for $775 million to $875 million in revenue for the first quarter. Analysts had been expecting $1.01 billion for the company. The lowered expectations caused many to rethink their investment strategy as shares dropped sharply following the lowered outlook for the first quarter.

The long-term picture for SanDisk remains promising. Flash memory become ingrained in the mobile industry and in spite of economic downturn, consumers continue to invest money in cell phones and technology. Many subscribers agree to two year service plans with cell phone companies in order to get the latest phone technology and little or no cost. As a leading provider to this strong industry, SanDisk seems like a safe investment for those seeking long-term stock picks.

Leading analysts seem confident in the company’s long-term potential, as indicated by their one-year price target above $40 currently. This would provide current share holders high returns on investment given its current price below $27 per share. In terms of stock investing this is a potentially strong potential move.

Along with cell phones and digital cameras, SanDisk’s flash memory chips are used in camcorders, mp3 music players and similar devices. While flash memory chips are viewed as one of the strongest semiconductor chip markets, many makers are struggling with the low pricing in the current market. SanDisk has as an advantage over many of its competitors because of a competitive cost structure that allows it to remain strong in a US consumer market facing recession.

International growth has also given the stock help, as it has a strong global presence. This enables the company to maintain consistent revenue streams in consumer markets that are performing better, making it a good addition to many stock market portfolios.

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