SanDisk to Slash 10% of Jobs

Updated from 4:48 p.m. EST

With no end in sight to the plummeting flash memory prices, SanDisk(SNDK Quote) said it would slash its head count by 10%, as profit margins will remain under "significant pressure" for several quarters.

In an announcement after Friday's close, the Milpitas, Calif., chipmaker announced a series of cost-cutting measures designed to save $30 million to $35 million a year.

"To strengthen SanDisk's profitability during this time of aggressive industry pricing, we are proactively taking a number of measures to reduce our product costs and operating expenses," said CEO Eli Harari in a statement.

Among the measures, SanDisk will eliminate 250 employees from its payroll, roughly 10% of the company's head count. The job cuts will occur primarily in March and will reflect the company's recently announced decision to de-empahsize the USB flash-card business it acquired as part of its M-Systems deal.

SanDisk also said it would reduce salaries in its executive ranks, including a 20% pay cut for Harari, 15% for its president and executive vice president, and 10% cuts for other vice presidents. Salaries for all other employees will be frozen, as will new hiring, save for strategic areas such as development of next-generation flash technologies.

Shares of SanDisk recently fell 4.5%, or $1.81, to $38.32 in extended trading.

Excess supply of NAND flash chips, combined with seasonally weak first-quarter demand has caused prices of NAND components to deteriorate by 50% in the past two months, said Harari.