Updated from 11:30 a.m. EST

SAN FRANCISCO -- Shares of



plunged Tuesday after the flash memory maker offered investors a triple whammy: a huge quarterly loss, a bleak forecast and an equity offering that could dilute current shareholders by up to 20%.

The stock closed down 23.2% to $8.66.

SanDisk's bad-news streak began late Monday, with the company announcing that it had swung to a fourth-quarter loss of nearly $2 billion, half of which was due to a combined pretax goodwill and intangible asset impairment charge, due to a sustained decline in SanDisk's market cap.

Shares of SanDisk have fallen more than 70% in the past nine months, as all makers of memory chips have suffered the worst of the downturn in global semiconductor demand.

SanDisk's fourth-quarter revenue, meanwhile, fell 30% from a year earlier. The top line did beat Wall Street estimates, just as it had done in the company's third quarter, but that only highlighted the dynamic of how little pricing power exists for memory makers.

Unfortunately, the company's first-quarter forecast was similarly dour. SanDisk set a wide range for revenue of $475 million to $575 million, well below analysts' consensus estimate of $631.7 million. In addition, the company said it expected a "substantial" gross margin loss in the quarter, although it would be less than the fourth quarter.

That sort of performance sets up questions of desperately high cash-burning and how SanDisk can manage to weather 2009. The company has already taken the usual tack of slashing costs and slowing production. Last week, SanDisk transferred more than 20% of its joint venture production capacity to partner



But management also wheeled out a shelf registration on Monday to set up a possible equity offering sometime this year. Such an offering, if it comes in at the company's early ballpark value of $300 million to $500 million, would dilute current shareholders by 12% to 20%.

All of the above was enough to garner a fairly consistent kiss of death from Wall Street analysts on Tuesday.

Lazard analyst Wendy Marx said she expects the company could burn up to $750 million cash in fiscal 2009. Considering SanDisk's $1.4 billion in cash and $1.23 billion in debt, she's starting to wonder whether the company will able to de-lever or obtain substantially equal refinancing arrangements for its $1.13 billion notes due in 2013 -- which are callable in 2010 -- without significantly diluting equity holders.

Caris analyst Betsy Van Hees lowered her price target on the stock to $8, citing the expectation that the company's balance sheet will continue to erode in 2009.

Life was so much rosier a few months ago for SanDisk when the company could afford the luxury of deeming a $26-a-share buyout offer from South Korean giant


as one that "significantly undervalued" the company.

Now, SanDisk has had to admit that its value has dropped off a cliff.

With across-the-board expectations that pricing will be dreadful in the memory-chip industry for some time, it's difficult to see how the sector won't experience some consolidation in 2009.


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, which primarily makes DRAM memory chips (SanDisk makes NAND), has been touted as another possible target for some larger predator.

Eventually the market will find equilibrium with supply and demand, and even a space as bad as this will turn higher at some point. But SanDisk investors may be wondering how much of the eventual spoils will go to them and how much will go to future stakeholders.