SanDisk results beat estimates on non-U.S. sales

SAN FRANCISCO (Reuters) - SanDisk Corp (SNDK.O), the world's largest maker of data-storage memory chips, reported third-quarter results that beat estimates as it boosted sales outside the United States and sold more chips to mobile-phone makers.

Gross profit margins rose, and the pricing environment "improved substantially" in the period, recovering from a recent slump, Chief Executive Eli Harari said in a statement.

The shares had chalked up after-hours gains after the earnings report but they were erased when executives told analysts on a conference call that fourth-quarter prices would likely decline "moderately more" than the third quarter's 16 percent drop, as retailers cut prices to stoke holiday sales of consumer electronics gadgets.

Executives on the conference call were not more specific about the expected price decline, and a spokesman could not immediately be reached for comment.

SanDisk stock was down 3.6 percent at $48.50 after earlier adding as much as 1.5 percent after-hours. The stock had closed up 2.5 percent at $50.31 in regular-session trading on Nasdaq.

Excluding acquisition-related charges, stock compensation and the related tax effect, third-quarter profit was 54 cents per share, beating the average analyst target of 33 cents per share, as polled by Reuters Estimates.

Revenue rose 38 percent to $1.04 billion, exceeding analysts' estimate of $939 million.

Third-quarter net income dropped 18 percent to $84.6 million, or 36 cents per share, from $103.3 million, or 51 cents per share, a year earlier. Expenses, including a new factory in China, jumped 39 percent to $233.2 million.

Harari said in a statement that revenue growth was fueled by strong retail demand outside North America and by sales to mobile phone customers. SanDisk's flash chips are used in a variety of consumer gadgets such as cell phones, digital cameras, music players and some notebook computers.