MILPITAS (dpa-AFX) - SanDisk Corp. (SNDK) said Wednesday its fourth-quarter earnings fell sharply from last year when results benefited from favorable tax benefits. Revenues for the quarter grew 19 percent on strong demand for its flash memory cards and embedded solutions used in smart phones, tablets and other electronic gadgets, but were partly offset by lower margins as the company continues to grapple with increased expenses. Excluding items, SanDisk's earnings for the quarter increased from last year and also beat analysts' estimates, while revenues matched expectations. The news hurt investor sentiments and SanDisk shares dropped more than 8 percent in extended session on the Nasdaq. SanDisk reported fourth-quarter net income of $281 million or $1.14 per share, down from $485 million or $2.01 per share last year. Results for the quarter include favorable income tax adjustments of $18.9 million, and amortization costs of $15 million, among other items. The prior-year quarter included favorable tax adjustments of $ 229.6 million, among other items. Excluding items, adjusted earnings for the quarter were $317 million or $1.29 per share, compared to $307 million or $1.27 per share last year. On average, 18 analysts polled by Thomson Reuters expected earnings of $1.26 per share for the quarter. Analysts' estimates typically exclude special items. The Milpitas, California-based company reported fourth-quarter revenues of $1.577 billion, compared to $1.327 billion in the prior year. Twenty Wall Street analysts expected revenues of $1.57 billion. CEO Sanjay Mehrotra said demand for NAND flash remains vibrant and SanDisk anticipates new growth avenues in the Enterprise and Client Computing markets. Product revenues, which form SanDisk's main business, rose to $1.47 billion from $1.24 billion last year, and license & royalty grew to $103.5 million from $86.6 million. Gross margin for the quarter slid to 42 percent from 43.4 percent last year, and adjusted margin dropped to 42.9 percent from 43.7 percent. Operating margin was also lower at 26.4 percent, compared to 26.9 percent in the prior year, and non-GAAP margin slid to 28.5 percent from 29 percent. During the quarter, SanDisk invested $147 million in research and development, up from $112.6 million a year ago last year. SNDK closed Wednesday at $52.34, up $1.15 or 2.25%, on a volume of 7.9 million shares on the Nasdaq. In after hours, the stock dropped $4.26 or 8.14%.
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