SanDisk Shares Soar After Samsung Deal On Chips

NEW YORK (AP) — Shares of SanDisk Corp. soared Wednesday after the flash memory card maker renewed a chip patent cross-licensing agreement with Samsung Electronics Co. and secured a guaranteed portion of future memory chip output from the company.

The agreement announced Wednesday replaces a deal that expires Aug. 14 and runs for seven years. The companies did not disclose financial details of the arrangement.

Shares jumped $2.09, or 15 percent, to $15.67 in afternoon trading.

"The agreement removes uncertainty that has hovered over SanDisk's story and should give investors more clarity with regard to (SanDisk's) long-term business model and prospects," Lazard Capital Markets analyst Daniel Amir told investors in a note Wednesday.

He reiterated a "Buy" rating on the stock.

Dinesh Moorjani, an analyst with Broadpoint AmTech, who also has a "Buy" rating, offered a similar take in a client note: "The outcome of the negotiations clearly lifts a significant uncertainty among investors," given Samsung represents more than half of the company's royalties.

Samsung, based in South Korea, is the world's largest supplier of NAND, a type of flash memory used in cell phones and digital cameras. The company offered last year to buy SanDisk, based in Milpitas, Calif., for $26 a share. SanDisk rebuffed the offer and Samsung pulled out of its bid in October, after months of negotiations.