Storage solutions company Sandisk Corporation (SNDK) recently rolled out a number of retail products and introduced a new preservation solutions category. SanDisk’s product portfolio addresses all market segments—from mobile phones and cameras to notebooks and tablets—and use cases ranging from entry level to professional.
The recently released product categories include SanDisk Memory Vault: a new product that is tested to preserve images in their original quality for up to 100 years. 64GB SanDisk Extreme Pro SDXC UHS-I Card, which doubles the performance and capacity of its professional-grade imaging line-up to create a new SD card based on the latest SD 3.0 specification’s Ultra High Speed (UHS) bus architecture.
Moreover, the company unveiled 64GB SanDisk Mobile Ultra micro SDXC Card, which will enhance the capacity of even the most advanced smartphones and tablets.
Apart from rolling out hard drive storage products, the company introduced Sansa Clip Zip MP3 player, the latest addition to the popular SansaClip family of products. Sansa Clip Zip MP3 player is a user-friendly, feature-rich music player with attractive pricing and is expected to gain massive popularity amongst music lovers.
The Sansa Clip Zip MP3 player offers rich sound quality and is compatible with all major music formats, including the AAC codec (DRM-free iTunes compatible). Moreover, the product comes with a new 1.1-inch LCD color screen, which offers 83.0% more viewing area than previous models. Its updated graphical interface displays album art and makes song navigation easier.
The company is slowly expanding its product portfolio, and has introduced products catering to a variety of customers. According to the terms of the recently-signed deal with ASUS TeK, ASUS will use SanDisk’s recently launched U100 solid state drive (SSD) in its upcoming UX Series ultra-thin notebook. We believe the new products will help the company win new deals and counter competition.
SanDisk posted decent second quarter 2011 results, surpassing the Zacks Consensus Estimate. Both OEM and retail businesses improved, enabling solid product revenue. Though revenue guidance was decent, margin guidance disappointed, as SanDisk continued to witness memory price declines and currency headwinds.
We understand that demand for flash memory could grow in the coming years, backed by the popularity of devices such as smartphones and tablets. Apple Inc.'s (AAPL) iPad being one of them. But we believe that slower cannibalization of PCs would slow down the demand for SanDisk’s memory products and rationalize revenue growth. Customer concentration, competitive pressure and the European weakness are other headwinds for the company.
Currently, SanDisk holds a Zacks #3 Rank, implying a short-term Hold rating.
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