Updated from 4:35 p.m. ESTHefty acquisition charges pushed SanDisk ( SNDK) into the red in its fourth quarter, despite stronger-than-expected sales of its flash memory chips. But investors seemed more concerned with comments during the company's post-earnings conference call about the glut of flash chips on the market, leading to steep price declines that are eroding the company's profit margins. The price declines will lead to lower price per megabytes across all of SanDisk's product lines in the current quarter, and have prompted SanDisk to sideline the lower-margin USB flash card business that accounts for half the revenue of M-Systems, the Israeli company SanDisk acquired for $1.5 billion in November. Shares of SanDisk plunged more than 10%, or $4.54, to $38.29 in extended trading Tuesday. The stock is down 38% since October, when investors first took fright at the steep decline in SanDisk's average price per megabyte sold. SanDisk said it had no intentions of backing off its manufacturing capacity expansion plans, despite the supply glut, expressing confidence that the falling prices would spur demand later in the year - a phenomenon known as elasticity. In fact, SanDisk executives said they would likely need to contract with third party chip manufacturers in the second half of 2007 in order to meet expected demand. NAND flash memory chips, which store data even without power, are a popular form of storage in digital gadgets like MP3 players, cell phones and digital cameras.