Looking to top the CNBC Portfolio Challenge leader board? The following links will help; Week 10 Final Portfolio, Contest Wrap-up and Thoughts • July 18 Bonus Bucks Answers

SanDisk CEO Affirms Market Optimism of NAND Turnaround

SanDisk Corp. (SNDK) shares are rising a healthy $1.76, or 6.80%, to $27.66 on heavy volume of 15.3 million shares compared to average daily volume of 9.7 million shares. The rather robust move follows the flash memory supplier’s first quarter report in which it earned $.21 per share on $850 million in revenue. Analysts on average, according to Thomson Financial, expected $.26 per share on $810.9 million. While revenue was higher because of a 5% rise in product revenue to $724 million and license and royalty revenue that jumped 30% on a year over year basis, there was a clear miss in the earnings per share number. The contributing factor, which has been at the heart of SanDisk share price erosion over the past few months, was the rapid decline in the price of flash memory. Average price per megabyte slid 61% on a year over year basis and GAAP product margin stood at 18.4%. SanDisk management reported that market conditions during the first quarter were just plain tough, characterized by excess supply, seasonally soft demand and aggressive pricing. Certainly bleak, but that type of environment seems to be history now. Forward-looking comments made by CEO Eli Harari affirmed what the market had been recently forecasting - a bottom in NAND flash memory prices, and gave credence to the recent uptick in SanDisk shares. During a conference call with investors, with the transcript graciously provided by SeekingAlpha, Harrari highlighted a few good reasons for why prices should stabilize and improve over time and combined with the stock trading at a historically low valuation, perhaps also unintentionally outlined the underpinnings of a solid long case for SanDisk that might intrigue fund managers; 1) Conditions that should improve gradually as the low-priced inventory is sold through the channels and as the U.S. government’s stimulus package gets consumers back into the stores in time for Mothers’ Day, Fathers’ Day and school graduations. 2) NAND Flash component pricing that has been inching up in the most recent weeks, and the anticipated 3G Apple iPhone and competitors’ new models are expected to fuel renewed demand for NAND Flash in the second half of this year. 3) The fact that the NAND Flash industry is self-correcting: NAND Flash component pricing has outstripped the competitiveness of 200-millimeter NAND production lines and is accelerating their decommissioning in 2008 and several competitors have announced plans to delay new 300-millimeter fabs and these actions should help to establish better balance between demand and supply in the second half of 2008 and into 2009.

Related Articles

• May 5, 2008 -- SanDisk Shares Forward-Looking, Shorts Still Skeptical
• April 4, 2008 -- SanDisk Rally All About Potential NAND Pricing Bottom
• March 28, 2008 -- JP Morgan Downgrade Could Mark SanDisk Bottom

It's that time of year again. CNBC's Million Dollar Portfolio Challenge will be getting underway on Monday, May 12. The tournament is similar in fashion to last year; each contestant receives 1 million CNBC Bucks and can trade stocks with a minimum market cap of $500 million. In addition to 10 pretty cool weekly prizes, there is a grand prize of $500,000 to the lucky contestant who finishes with the highest portfolio return. The only twist to the tournament is that currency trading is now allowed.

We'll be doing a number of things this time around to help with your trading success and so you can have better shot at winning the tournament. Follow the links below to learn more, and good luck!