Flash memory storage solution provider SanDisk Corp. SNDK recently unveiled a solid state drive (SSD) — CloudSpeed Eco Gen. II SATA SSD — designed as a drop-in replacement for hard disk drives (HDD) for cloud service providers. Expected to be available worldwide by the end of this year, CloudSpeed Eco will boost the company’s SSD product portfolio.
The new device has a storage capacity of up to 2 terabytes (TB) and is based on 15-nanometer (nm) NAND flash technology. SanDisk believes that the drive is 3 times faster than the traditional HDDs, and offers quick response system and energy efficient features.
Therefore, the device will facilitate interconnection and data center service providers a high storage capacity along with quick response time and lower cost-per-square-foot for hyper scale applications which include analytics, media streaming and content repositories.
SanDisk appears to be aggressively focusing on expanding its SSD product portfolio. On May 25, the company unveiled – Z400s SSD — to improve the computing experience for both consumers and original equipment manufacturers (OEMs).
The company is sampling Z400s with customers in mSATA, 2.5” SATA and M.2 (2242 and 2280) form factors, with 32GB, 64GB, 128GB and 256GB capacities. The Z400s SSD targets OEMs that can embed it into their upcoming notebook/desktop line-ups.
With the launch of CloudSpeed Eco, the company is now targeting data centers which are witnessing robust demand for their cloud services as various enterprises are now adopting cloud computing services. The exponential growth in the amount of data, complexity of data formats and the need to scale resources at regular intervals compelled several companies to turn to cloud computing vendors. Furthermore, the trend is likely to continue over the next several years.
Therefore, we expect SanDisk’s recent additions to SSD product portfolio to help it to further strengthen its market position. As per the research firm IHS iSuppli, the demand for SSDs will grow more than 40% in 2015. Another research firm, IDC, predicts SSD unit shipments to grow at a CAGR of 34% between 2013 and 2018.
Furthermore, according to Gartner, the number of connected devices will reach 25 billion by 2020 generating enormous amount of data to be analyzed in real time. Thus, we believe that with continuous enhancement in its product portfolio, SanDisk can capitalize on this opportunity.
However, SanDisk’s near-term prospects do not look good. The company started 2015 on a weak note posting lower-than-expected first-quarter results. The company revealed that the results were negatively impacted by some product related issues, weaker-than-expected pricing and supply constraints.
Further, anticipating a significant decline in client SSD revenues due to enormous customer shift, the company issued tepid second-quarter guidance and lowered the full-year 2015 revenue outlook. Also, lower-than-expected demand from both enterprise SATA and SAS led to the weak revenue outlook. Pricing pressure also remains a major headwind.
Currently, SanDisk has a Zacks Rank #5 (Strong Sell).
Stocks to Consider
Some better-ranked stocks in the broader technology sector are Cirrus logic Inc. CRUS, CEVA Inc. CEVA and eMagin Corp. EMAN. All these stocks sport a Zacks Rank #1 (Strong Buy).
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