Leading flash storage solutions provider, SanDisk Corp. (SNDK) recently entered into a partnership with Avnet Inc. (AVT), an electronics and IT provider, to distribute SanDisk’s flash-based hardware and software solutions in North America, Europe, the Middle East and Africa (EMEA), Asia Pacific and Latin America. Avnet will distribute SanDisk’s solid state drives (SSDs) and embedded flash computing products through its two operating segments Avnet Electronics Marketing and Avnet Technology Solutions. The financial details of the deal were not disclosed.
The agreement will further strengthen SanDisk’s position in the storage market since Avnet is a leading distributor of electronic components, enterprise computer and storage products and embedded subsystems. Moreover, leveraging Avnet’s distribution capabilities, SanDisk will be able to increase its customer base, going forward.
The agreement covers SATA and SAS-based SSDs including SanDisk X210 SSD and the SanDisk X110 SSD, which enhance the performance of data centers and client computing devices.
On the other hand, the agreement will help Avnet to provide its channel partners with better solutions for flash based storage. It will also enable Avnet to provide independent software vendor (ISV), system integrator (SI), and value-added reseller (VAR) partners with technical expertise, training and development and financial services, thus improving Avnet’s revenue stream and possibly its market share.
Additionally, SanDisk’s management remains positive about SSD revenue growth, favorable product mix and better supply/demand metrics in fiscal 2013 which, in turn, will improve the pricing environment. SanDisk also expects an increase in demand for its latest 19-nm technology.
Apart from this, SanDisk’s focus on iNAND technology will drive its mobile-embedded products. The company also expects its total SSD contribution to be roughly 25.0% of total revenue moving into 2014.
We believe that the synergies from the acquisition will help SanDisk to emerge as a major player in the fast growing flash memory market, thus lending greater stability to its revenue stream. However, lackluster PC sales, European issues, competition from Western Digital Corp. (WDC) and currency fluctuations are headwinds.
Currently, SanDisk holds a Zacks Rank #2 (Hold). A better-ranked stock in the technology sector is Micron Technology Inc. (MU) with a Zacks Rank #1 (Strong Buy).
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