SanDisk CEO Eyes 2011 Flash Boost

MILPITAS, Calif.( TheStreet) -- SanDisk ( SNDK), which posted strong fourth-quarter results last week, will reap the benefits of the mobile explosion in 2011, according to CEO Sanjay Mehrotra.

"The biggest driver of growth in 2011 is smartphones and tablets," he told TheStreet. "Third-party estimates put the smartphone growth going from over 200 million units in 2010 to over 300 million in 2011."
SanDisk CEO Sanjay Mehrotra says that 2011 will be a big year in Flash Memory.

SanDisk, which provides Flash memory hardware for a slew of companies, including Apple ( AAPL) and Motorola ( MMI), is confident that consumers will snap up increasingly tricked-out phones.

"I think that you're going to see features related to higher-res cameras, better screens and improved resolutions," said Mehrotra. "In addition to increasing numbers of Flash units, average capacities will increase on each of these units."

SanDisk duly offered up healthy guidance after market close last Thursday. The storage firm, which does not provide an earnings forecast, expects first-quarter sales between $1.2 billion and $1.275 billion, above analysts' estimate of $1.18 billion. For the full year, SanDisk is looking for a revenue range of $5.3 billion to $5.7 billion. Analysts surveyed by Thomson Reuters had predicted sales of $4.8 billion.

Mehrotra explained that tablets are also helping push SanDisk's sales northward. "I think that we will see tablets from multiple manufacturers that will drive this category," he said. "At CES, more than 60 tablet models were announced and several of these will go into production in the first half of the year -- this really bodes well for SanDisk."

The CEO declined to name any specific customers, but said that he expects tablets to become increasingly common sights in corporate America. "Tablets will continue to get used more in the enterprise," he said. "It's just such a convenient device -- it's small, easy to carry, and, for many executives, it can really meet your requirements when you're travelling."

SanDisk, however, came under margin pressure during the fourth quarter, spooking investors. The company's stock was down $1.67, or 3.57%, to $45.13 on Monday.

After posting a total gross profit margin of 52% during the third quarter, the company's margin slipped to 44% in the fourth quarter. Mehrotra told TheStreet that this was impacted by a slightly larger-than-usual decline in Flash pricing, costs related to a power outage at two of the company's fabrication plants, and foreign exchange pressure.

The CEO, though, shrugged off the contracting margin. "Our total margin of 44% was a very strong margin," he said, adding that this is well ahead of the company's long-term financial model, which calls for a margin between 35% and 41%.

--Written by James Rogers in New York.

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