Press Releases

SanDisk Revises Q1 Fiscal 2001 Outlook

Mar 15, 2001

SUNNYVALE, CA, Mar. 15, 2001 - SanDisk Corporation (Nasdaq:SNDK), announced today that due to continuing weakness in economic conditions and ongoing customer inventory corrections, it expects revenue and earnings for the first quarter of 2001 to be significantly lower than previously expected.

Overall market conditions have not improved in the quarter; consequently, demand from major OEM customers has been substantially below forecast as these customers continue to work down their existing inventories. In addition, retail channel orders are running at much lower levels than those of the fourth quarter of fiscal 2000. Product gross margins are being adversely impacted by lower volumes and a marked decline in average selling prices due to competition.

"SanDisk is managing the current difficult market conditions and poor order visibility by sharply focusing on product cost reductions through accelerating our product development efforts in advanced Flash memory and controller technology to counter the new pricing environment. We are tightly controlling expenses and have implemented a reduction in our regular and contract employee work force and reduced discretionary spending," said Dr. Eli Harari, President and CEO of SanDisk. "Despite the near term challenges and market uncertainty, we are optimistic about our prospects once the current down-cycle comes to an end. The decline in product average selling prices, although having a short-term effect, is the most important catalyst for re-igniting demand for our products in the next up cycle. We are particularly encouraged by the growing momentum for the widespread adoption of the Secure Digital card in digital consumer electronics, which is expected to begin to contribute to our revenues in the second quarter of this year."

SanDisk currently expects that first quarter 2001 product revenues will decline approximately 45 percent sequentially from the $155 million reported in the fourth quarter of 2000. Prior expectations were for a 15% to 20% reduction in product revenues. The Company also anticipates that first quarter earnings will be approximately breakeven.

SanDisk will provide its investors and analysts with information and forward-looking guidance in its quarterly financial news releases and conference calls. The Company will not provide any further guidance or updates on its performance during the quarter unless done through a news release, conference call or SEC filing in compliance with Regulation Fair Disclosure.

This news release contains certain forward looking statements including our expectations for future product revenues and bookings, average selling prices, gross margin and profits that are based on current expectations and involve risks and uncertainties that may significantly and adversely affect our business, financial condition and results of operations. In addition to the factors discussed above, other risks include: the timely introduction and acceptance of new consumer products that incorporate our flash storage devices; future average selling price erosion due to excess capacity and price competition that is more severe than normal learning curve price reductions; slower than expected growth in the emerging markets for our products which may result in reduced sales and increased inventory; increased expenses and fluctuations in operating results and yields related to the startup of wafer production at our FlashVision foundry joint venture; the continued successful management of assembly operations in China, Taiwan and the Philippines; seasonality of product sales; success in developing brand name preference and an efficient distribution system for SanDisk's products in the retail channel; economic conditions and exchange rates in Japan, the Pacific Rim, Europe and other geographic regions as they affect SanDisk's customers; the successful development and launch of our Secure Digital card products; and the other risks detailed from time to time in our Securities and Exchange Commission filings and reports, including, but not limited to, the Form 10-Q for the quarter ended September 30, 2000 and the Annual Report on Form 10-K for the year ended December 31, 1999. Future results may differ materially from those previously reported. We assume no obligation to update the information in this release.

SanDisk Corporation, the world's largest supplier of flash data storage products, designs, manufactures and markets industry-standard, solid-state data, digital imaging and audio storage products using its patented, high density flash memory and controller technology. SanDisk is based in Sunnyvale, CA.

CompactFlash and CF are trademarks of SanDisk Corporation.


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